"They
[United States] are living beyond their means
and shifting a part of the weight
of their problems to the world
economy. They are living like
parasites off the global economy
and their monopoly of the dollar.
If [in America]
there is a systemic malfunction,
this will affect everyone. Countries
like Russia and China hold a significant part of their reserves
in American securities. There
should be other reserve currencies." ~ Vladimir Putin (2011)

"The United States and global economy may have to
get used to financially repressive,
and therefore low policy rates
for decades to come. Right now
the market and the Fed forecasts
expect Fed Funds to be one percent
higher by late 2015 and one percent
higher still by December 2016.
Bet against that." ~ Bill Gross (PIMCO, who comprehends ZIRP Forever, but might not anticipate
QE to Infinity)

"Non-crisis
QE should be thought of as a
mechanism to short circuit normal
(financial and economic) system
operations, and a particularly
dangerous one at that. Instead
of credit expansion and more
typical economic processes feeding
into higher investment, incomes,
corporate earnings, and wealth
creation, the Fed moved to bypass
the economy and inject unprecedented
liquidity directly to spur risk-taking
and inflated securities markets.
Injecting liquidity into already
overheated speculative markets
is tantamount to QE as rocket
fuel. It both inflates securities
prices directly, while also heavily
incentivizes risk-taking and
speculative leveraging. Couple
rocket fuel QE with transparency,
forward guidance, and a promise
to backstop markets in the event
of a tightening of financial
conditions, and you have progressed
all the way to reckless monetary
policy." ~ Doug Noland (of Prudent Bear)

"Such
stealth transfer of wealth enabled
and facilitated by central bank
policies are not only economically
unsustainable, they are reprehensively
immoral." ~ Stephen Roach

"The United States is an exceptional country right
now. We are the largest debtor
nation in world history. No country
has ever has ever gotten itself
this deep in debt, and we are
going to pay the price down the
road." ~ Jim Rogers

"When
the Zero Interest Rate Pollicy
was introduced, all financial
models became useless. When Quantitative
Easing was introduced with massive
bond monetization purchases,
the clock started on systemic
failure. The entire financial
and economic systems have grown
fully dependent upon the USFed
as a money pump. Accidents will
happen. Insolvency is throughout
the system. The central banks
are systematically killing capital,
while talking about stimulus.
Grand events toward stages of
collapse are coming and probably
soon from the diminishing capital
base which few economists even
realize, since badly trained." ~ the Jackass

"If
it were positive to take interest
rates into negative territory,
I would be voting for that." ~ Janet Yellen (March 2013, expect
no change in monetary policy
direction)

"It is important to recognize that
the financial crisis generated
significant headwinds that are
only slowly abating. We must
push against these headwinds
forcefully to best achieve our
objectives." ~ William Dudley (New York Fed head,
justifying higher future QE bond
purchase volume, the Jackass
forecast, six years after the
NYFed head failed to recognize
the mortgage bond problem)

"Even
in one of the wealthiest parts
of the world, there is a great
deal of foreclosure activity.
Now a great deal of people who
are fortunate to own their own
houses, owe more on them than
the houses are worth in the present
market. That has all changed
in the last eight years. The
disparity between rich people
and poor people in America has increased dramatically since when
we started. The Middle Class
has become more like poor people
than they were 30 years ago.
So I do not think it is getting
any better." ~ Jimmy Carter (former US President,
and half brother to John F Kennedy
and Robert F Kennedy)

"In
order to honor the fallen soldiers
who are not to receive death
benefits from the US Government shutdown, Hagel announced that
the families can keep the 100
lbs of heroin in each soldier
coffin that returns home. Now
that is what we call a million
dollar wound." ~ Anonymous

## INTRO MONETARY FRAGMENTS

◄$$$ THE YELLEN POSITION ON MONETARY POLICY SHOULD BE CLEAR. IT WILL
SHOW NO CHANGE FROM THE BERNANKE
FED. YELLEN IS A FREE MONEY ADVOCATE
AND HAS URGED EXTREME MEASURES
LIKE NEGATIVE INTEREST RATES WHILE
SUPPORTING MASSIVE BOND MONETIZATION.
EXPECT A STEADY HAND ON THE SAME
DESTRUCTIVE COURSE. THE YELLEN
FED WILL PRINT MONEY FOREVER TO
CREATE JOBS. HER PAST SHOWS SEVERAL
CONFRONTATIONS AGAINST BAD POLICY,
ALL PROVING HER TO BE CORRECT.
SHE WILL SERVE AS A BAGHOLDER AT
A LATE STAGE, WITH NO OPTION TO
DEPART FROM THE CURRENT MONETARY
POLICY OF ZERO BOUND RATES FOREVER
AND BOND MONETIZATION TO INFINITY.
$$$

In a speech given in March 2013 before the National Assn for Business Economics
Policy Conference, Yellen made
the absurd statement, "If
it were positive to take interest
rates into negative territory,
I would be voting for that." One
is left to wonder how it would
be decided, and by whom, that doing
so would be positive, meaning to
have benefit. Yellen has a solid
career resume, if credit is given
to the defenders of the current
system. She holds the post of Vice
Chair of the Board of Governors
of the Federal Reserve System.
Previously she served as head of
the San Francisco Fed, and as head
of the White House Council of Economic
Advisers in the Clinton Admin.
She is a Professor Emerita at the
Berkeley Haas School of Business
at the Univ of California. She
continues the pedigree strain common
to the USFed Chairman position
over the last two decades, an ethnic
syndicate job requirement methinks.

Yellen sees nothing dangerous, destructive, or harmful
in the current Quantitative Easing
initiatives held in place by
the USFed. She pointed to potential
costs of its asset purchases,
which need to be monitored over
time. She does not see anything
that would lead her to advocate
a curtailment of our purchase
program. In other words, she sees no capital
destruction effect from a rising
cost structure in response to
the extreme USDollar debasement
at work in a corrosive manner.
She errantly believes the ZIRP & QE
policy will help foster a stronger
recovery and keep inflation close
to the longer-term target. Neither
concept is correct. She cites
vague policy risks, but does
not elaborate. Doing so would
surely cause hot debate, thus
silence to be heard. She acknowledges
the high cost that unemployed
workers and their families are
paying in this disappointingly
slow recovery. She concluded, "There
is the risk of longer-term damage
to the labor market and the economy's
productive capacity. At present,
I view the balance of risks as
still calling for a highly accommodative
monetary policy to support a
stronger recovery and more-rapid
growth in employment."Hence,
the current status noted, but
not the risk of aggravation due
to the USFed policy itself. Risk
to productive capacity seems
close to admission of capital
destruction. See the Federal
Reserve website for a Yellen
speech (CLICK HERE).

The consensus is that a Yellen Fed will be looser with amplified free money
and for a longer period. Any
new USFed has no alternative, or
else sudden collapse. To promise
of continued zero bound with heavy
bond monetization until the USEconomy
recovers is a promise of its continuation
until the systemic failure. The
banking policy masters do not recognize
or discuss the deep capital destruction
in reaction to constantly debased
currency. The consensus is that
the FOMC will continue to print
money until the USEconomy creates
enough jobs to reignite wage pressures
and inflation, regardless of asset
bubbles, or even collateral damage
along the way. No USFed chief in
history has been better qualified
than Yellen, ironically, as far
as being a veteran system wonk.
In glaring contrast, Alan Greenspan
was a political speech writer for
Richard Nixon. Sir Alan never truly
earned a PhD in Economics, his
parchment being an honorary degree
from Columbia Univ. Greenspan did
however author some excellent essays
on the benefits of gold and its
proper role at the center of the
financial system, now proved correct.

To her credit, Yellen confronted Greenspan in 1996,
opposing his policy that caused
irrational exuberrance. She pushed for for pre-emptive rate
rises to choke inflation and
wean the economy off cheap credit.
She was correct, but was overruled
by Mr Magoo. The Greenspan Fed
then began to make a series of
fatal errors, leading to the
2000 tech telecom bubble and
bust, followed by the housing & mortgage
bubble and bust, both under the
supposedly brilliant Greenspan
watch. He was a bubble puffer
and wrecking ball, deemed brilliant
for his obfuscation and calm
hand during the crises he himself
created. The US nation became addicted to ever lower real
interest rates. Nobody called
her a dove in the 1990 decade.
She is a dove by requirement
now, since the system is broken
and fully dependent on an even
more massive torrent of free
money.

A decade later, Yellen went on to oppose New
York Fed chief William Dudley
in December 2007 over the risks
of subprime mortgage defaults. Thus
she confronted the Goldman Sachs
machine (Dudley is from GSax). Yellen is on record as being on the other side
during those crucial months before
the subprime housing crash. She
tried to alert the Board toward
the danger of a chain reaction
through the shadow banking system.
Ben Bernanke and the FOMC majority
scoffed at her firmly stated
admonitions that the subprime
debacle was the tip of an iceberg.
They over-ruled her prudent wisdom.
Yellen said, "I feel
the presence of a 600-pound gorilla
in the room, and that is the
housing sector. The risk for
further significant deterioration,
with house prices falling and
mortgage delinquencies rising,
causes me appreciable angst." The
warning was given in June 2007,
a full 15 months before the storm
reached climax. During that time
the Jackass was also making even
more dire warnings. The Jackass
warned of a chain reaction that
would render the US banking system insolvent as a result, which
indeed happened.

In the clash with Dudley directly, Yellen told him in
no uncertain terms that he was
supposed to be the official with
his finger on the market pulse.
She said, "The possibilities
of a credit crunch developing and
of the economy slipping into a
recession seem all too real. At
the time of our last meeting, I
held out hope that the financial
turmoil would gradually ebb and
the economy might escape without
serious damage. Subsequent developments
have severely shaken that belief." She
was absolutely correct again. The
USEconomy was already in recession
by then. As footnote, Robert Hetzel
of the Richmond Fed wrote a powerful
book entitled "The Great
Recession" which accused
the USFed itself of being the chief
cause of the financial disaster
that reached climax in 2008. He
cited a far too tight FOMC which
let the M2 money supply implode
in early 2008. The disasters at
Lehman, AIG, and Fannie Mae followed.
See the UK Telegraph article by
Ambrose (CLICK HERE).

Not to be left out, exiting Congressman Ron Paul offered
his opinion that Yellen at the
USFed post would lead to a grim
future with no change in course,
since the brethren are Keynesians
one and all. He
foresees reduced incomes, falling
standard of living, and weakened
USDollar puchase power.Rep
Paul does not give Yellen any
credit for opposing both Greenspan
and Dudley in past confrontations.
The irony is that Yellen will
preside over the systemic failure
that she herself warned about.
See the Zero Hedge article (CLICK HERE).
The USFed under Greenspan and
Bernanke has a history of creating
bubbles and then pricking them,
with a major role in every crisis. The
ongoing endless perpetual ZIRP & QE
is their legacy, which has placed
a noose around the neck of the
nation. Systemic failure,
dead ahead!!

The Jackass view is simple. Janet Yellen is set to take
the bagholder post as the new
USFed chair. She is stuck in
the current monetary policy with
no option to alter the course
toward catastrophe. She has no workable options. She cannot stop the Zero Interest Rate Policy,
or else face an implosion to
the USEconomy from rising rates.
She cannot stop the Quantitative
Easing policy either, or else
face an implosion to the USTreasury
Bond market from unwinding carry
trade, diversification among
foreign bond holders, and the
lit fuse of derivatives. Yellen
is bound to continue the amplified
free money course, despite the
growing risks and certain capital
destruction. A key question is
whether Yellen will slip in a
comment that ZIRP & QE kills
capital and thus inhibits the
delusional recovery, the requirement
to end the accommodative policy.
The better question is whether
Yellen submits well to nasty
deforming caricatures in the
press. Of course she will. We
humans are all funny looking.

◄$$$ THE NEW HIGH SPEED CHINESE RAILWAY WILL SERVE THE ASEAN NATION NEEDS.
THE ASIANS ARE BUSY BUILDING ECONOMIES.
BY CONTRAST THE UNITED STATES IS
BUSY WITH WAR AND BOND FRAUD AMIDST
POLITICAL STALEMATE, WHILE THE
BANKS ARE DEPENDENT UPON NARCOTIC
MONEY. EAST IS BUSY BUILDING THE
AVENUES OF COMMERCE. WEST IS BUSY
OVERSEEING THE VAST PROFOUND DECAY.
THE CONTRAST IS STARK. $$$

China deploys discreet ASEAN diplomacy
by means of constructing a high
speed railway which will connect
the many nations. The US by contrast wages war, urges regime overthrow, manages its financial
collapse, funds military weapon
contracts, argues on politics
while budgets are in deadlock,
all the while engaged in incredibly
deep narcotics business that
the New York banks are fully
dependent upon. The Chinese and
Asian partners are busy building
the infrastructure. China will
forge new stronger ties, and
create leadership, by means of
projects like the high speed
railway. It will build relations
and enable commerce. The US is winning new
enemies even among the ranks
of its allies.

To improve Chinese relationships with Southeast Asian nations, President
Xi Jinping has encouraged Chinese
enterprises to invest more money
and resources in constructing
the Pan-Asian High Speed Rail
link. The line would run
from the capital of south China's Yunnan province to
the nation state of Singapore.
Its construction has already
begun between Kunming
and Vientiane,
the capital of Laos (pictured below). The construction of the
second rail line between Bangkok
and Nakhon Ratchasima province
in Thailand will be finished next year. Through
reconstructing the railway from Malaysia and Singapore, China would be able
to connect itself with all the
major members of ASEAN. For
instance, the proposed 300-km
link could reduce traveling times
for passengers from Kuala
Lumpur to Singapore from six hours to 90 minutes. In the
future, this line will be connected
to the counterparts in Thailand. The segments
are coming together to eventually
form a Pan-Asian high-speed rail
link. The grand project is not
lofty, but rather ambitious effective
and real. The high speed rail
lines have become a major way
for China to exert its influence on neighboring countries.
Despite serious accidents like
the 2011 Wenzhou
train collision which killed
40 people, China is steaming ahead on pushing rail exports
via these routes. Accidents are
not just an Asian phenomenon.
Check out Madrid
two months ago. See the Want
China Times article (CLICK HERE).

◄$$$ EVOLUTION OF THREE US-POLITICAL PARTIES IS POSSIBLE, AS THE REPUBLICANS
RISK RUN TO SPLIT OFF A SEPARATE
TEA PARTY. ELECTIONS IN ONE YEAR
COULD PROVIDE A RECONSTRUCTION.
$$$

The conflict over ObamaCare, the USGovt shutdown, and the debt ceiling is a
pre-cursor to something potentially
larger. The ground level conflict
continues to be over taxes versus
entitlements, whose polarized camps
produce the stalemate. When the
climax arrives in the next several
weeks, the inner party divisions
are sufficiently great to bring
about some formal splits. The split
of the Republican party into two
factions is possible. See the oppositions
internally. Inner conflict on one
or two issues is normal. But the
inner conflict is pervasive.

The United States as a nation is on the verge of
the formation and formal establishment
of a three-party system. If it
comes to pass, it could have
enormous implications. The results
could be very enlightening, at
the same time some changes could
be profound. Consider that de-centralization would
pick up. It would be good for
the people on Main
Street businesses, but bad for
the banker cabal. Trust and confidence
in the US financial structures
would diminish rapidly. Refer
to the USDollar currency and
its USTreasury vehicle for banking
reserves. The Cabal led by bankers
would realize less power. The United
States would
be considered no different from Europe
in being a financial wreck and
basket case. Its debt finance
would become problematic, like France, Italy, and Spain. The little man on the ground would be
able to more easily distinguish
who works for the business in
question, and who works for the
cabal.

Small private businesses could be big winners in the
adjustment process, while the
big corporations and multi-nationals
could be losers. The 2014 Congress elections one year from November might be highly disruptive
with the Tea party surprising
to the upside. They seek a greater
say in WashingtonDC policy matters.
Finally, factor in corruption,
bribery, threats, promise of
network promotion, and more,
the typical tactics to prevent
a third party to be formed. See
the PressTV article (CLICK HERE). Bear
in mind that the Tea Party sold
out and endorsed the continuation
of Homeland Security with all
the Patriot Act features that
formally extinguish liberties. In
the Jackass view, the Tea Party
has already sold out but it could
emerge with a bold purpose.

## AMERICAN FAILURE & ISOLATION

◄$$$ PERCEPTIONS ARE MANAGED DURING THE CHRONIC GLOBAL FINANCIAL CRISIS.
THE BROAD COLLAPSE IS IN PROGRESS.
CRISIS AVERTED IS THE EMPTY REFRAIN.
PROPAGANDA SPINS. JIM GRANT CALLS
THE USGOVT DEBT DEFAULT AS INEVITABLE,
ONLY THE PATH UNCLEAR. UNLIMITED
MONEY PRINTING LEADS TO A CERTAIN
CLIMAX FAILURE. DAVID STOCKMAN
EXPECTS A CATASTROPHE TO STRIKE,
AS THE USFED TREATMENT LOSES ITS
EFFECT. HE CALLS MONETARY CENTRAL
PLANNING A FAILURE WITHOUT MENTION
OF THE WORD POLITBURO.

KEITH BARRON DESCRIBED AN ENDLESS PROCESSION OF CRISES WITHOUT SOLUTION. HE
EXPECTS THE USFED TO PRINT ENDLESSLY
AND TO MONETIZE BONDS PERSISTENTLY
AND DOGGEDLY. WHEN THE COLLPASE
HITS, IT WILL BE ONE FOR THE AGES.
THE PANICKY SCRAMBLE FOR GOLD WILL
BE CLEAR AND DESPERATE, THE TRUE
SAFE HAVEN. $$$

Once the debt ceiling is raised, Gold will crash as the crisis is averted.
Yawn, how tiresome!! The propaganda
is relentless, way off kilter,
and totally false. A patch soon
announced on USGovt budget and
spending limit raised (???), crisis
averted. The new USFed chair appointed,
crisis averted. The DJIA stock
index makes new highs, crisis averted.
The QE4 is announced and volume
doubles, crisis averted. German
official gold will be repatriated
(eventually), crisis averted. JPMorgan
settles more bond and mortgage
fraud, crisis averted. Basel III
Rules installed (sort of), crisis
averted. The Saudis reassure their
love (cough cough) of America, crisis
averted. The next G-20 Meeting
adjourns (without outward revolt),
crisis averted. The APEC meeting
adjourns (with only a US snub)
in Asia, crisis
averted. The US-led Trans Pacific
Partnership moves along (ignored
by Asia),
crisis averted. Goldman Sachs announces
a profit (full of gimmicks), crisis
averted. Homes sales do not fall
off the cliff (recovery on course),
crisis averted. Car sales are flat
for the quarter (weather impaired),
crisis averted. The sun rises,
crisis averted. In the meantime,
more Yuan Swap Facilities have
been installed, gone global, a
sign of the new Chinese eclipse
of the USDollar in trade. The crisis
continues to fester and screech.
In the meantime, far off the radar, Congo smuggling
resumes for the obscenely wealthy
but ravaged nation. We carry on,
over the cliff. Gold is set
to advance to $7000 per ounce.
It will be driven by the global
rejection of the USDollar and new
trade alternatives put in place,
crisis averted if prepared with
precious metals in the portfolio.

The bullshit lines fallen upon Jackass ears are endless. It used to be Second
Half Economic Recovery. Then the
Green Shoots. Then the Exit Strategy. Then
ZIRP & QE were the saviours,
the present day Bobsey
Weimar Twins. Now it is Taper
QE in four to six months. Focus
is given to confidence, volatility,
liquidity, uncertainty, and Too
Big to Fail Banks. Focus should
instead be given to insolvency,
ruin of capital, absent solutions,
certain systemic failure, and Big
US Bank liquidation. Goebbels would
be proud of his grafted descendent
scions running the Nazi Nation
from his post as Minister of Information.

Jim Grant calls America's debt default as
inevitable. This Jackass forecast made in late 2008 is now becoming more obvious by the
month, soon to be part of the
financial landscape. See the
Zero Hedge article (CLICK HERE).
He believes extreme monetary
disorder is coming to the world.
He points to Bernanke, who
seems to boast about learning
from a reckless ongoing experiment,
which is certain to result in
complete and utter failure.
Rabid creation of unconvertible
currency never ends well, always
in crisis climax. Ben is no student
of history. Gold is an island
of refuge, as central planning
in progress has no prospect of
success. The type of failure
is uncertain, but price inflation
is a likely outcome. Gold
will serve well regardless of
the horrendous outcome, an investment
in monetary disorder. See
the King World News interview
(CLICK HERE).

Former Reagan Admin Budget Director David Stockman commented on the financial
collapse in progress. He has always
had a good grip on the reality. Stockman
expects a catastrophe to strike,
as the Bernanke Fed cobbles a string
of excuses for delaying a resolution. The
certain shattered confidence he
warned about has already begun.
The financial markets have lost
their honest pricing, a critical
element to a capitalist system.
The music will stop and prices
will adjust when the USFed actions
have no further effect. Their only
traction has been in rising costs.
A unique historical failure is
near. Stockman concluded, "There
is every reason to believe that
[the failure] will be outside the
range of prior experience. Once
it is clear that the Fed is out
of ammunition, it is going to cause
an even greater wave of panic than
we had last time [in 2008]. The
Fed is a ship of fools. They have
enormous power over the entire
financial system, not only domestically,
but over the entire global system.
It tells you why this doctrine
of monetary central planning is
so destructive and dangerous.
No twelve people should be in a
position to unleash this kind of
turmoil." See the King
World News interview (CLICK HERE).

Mining sector consultant Keith Barron warned of a monster collapse, one
for the ages in his words.
The United States is
lurching from crisis to crisis,
which occur much more frequently,
like days apart or even hours
apart. Asian nations are loading
up on gold bullion, whose price
has historically been well correlated
with rising interest rates. Much
more bad news is coming. He summarized
in conclusion, saying "This
has been my sentiment for a long
time, the US economic
situation is just too weak to
taper [in reduced USFed bond
purchases]. The Fed made a big
mistake by telegraphing that
they were going to taper. This
sent interest rates higher and
crippled the economy even further.
The economy cannot handle higher
interest rates. So the US government has to attempt to keep interest
rates artificially low for as
long as possible. The reality
is that right now Western central
planners are trying to hold off
this collapse for as long as
they can. When it finally
comes, it will be a monster collapse.
I have lived in countries when
they have imploded, but this
one will be particularly ugly.
People had better make sure they
are prepared because once it
starts, it will be too late.
This collapse will be one for
the ages. You do not want to
be scrambling during that chaos
and trying to accumulate things
like physical gold, because the
system will be breaking down." The
USFed through hyper monetary
inflation has concealed the rot
throughout the system, as Barron
described. They cannot prevent
the implosion, only delay it.
The torch of global leadership
will be passed from the US to China, an unstoppable event. He expects price
inflation to pick up and fan
the flames of panic as the crisis
builds. See the King World News
interviews (CLICK HERE and HERE).

The Voice commented on the collapse in progress. The leadership mantle worn
by the United States is being removed. He never minces
words. He wrote, "There
is a lot more going than meets
the eye. The Anglo-American camp
is defacto finished, for all practical
purposes. They cannot keep their
house of cards and lies together
any longer. Furthermore, the
US they cannot keep the cash flow
going from various operations.
The wheels have come off. The
BRICS nations are going to have
to deal with India's
economic implosion. If a big country
has a small problem, then the rest
of the world has a very big problem.
It is not going to be pretty. We
need to be very alert, since the
smallest and most insignificant
appearing incident might be the
fuse that triggers an event driven
scenario."

◄$$$ CHINA HAS BOLDLY CALLED FOR
AN END TO THE DOLLAR RESERVE, AN
END TO THE AMERICAN DOMINATED WORLD,
AN END TO THE GLOBAL LEADERSHIP
BY A FAILED AMERICAN CREW. A BRASH
GALLANT CHALLENGE WAGED INDEED.
THE USGOVT RESPONDS PRIMARILY WITH
MORE PILES OF DEBT, MORE BANKING
RULES HEAPED UPON FOREIGN NATIONS,
MORE SUBTERFUGE, AND NEW MORE NOBEL
WARS. $$$

The volume rises. The official Chinese news agency has called for the world
to be de-Americanized, complaining
that the destinies of people
should not be left in the hands
of a hypocritical nation with
a dysfunctional government. The
Xinhua news agency took the gloves
off, kicked Uncle Sam in the
groin, and spit in the USGovt
face. They accused the United
States of
being a civilian slayer, guilty
of prisoner torturer, and meddler
in the affairs of sovereign nations.
They called Pax Americana a failure
on all fronts, without mentioning
the Full Spectrum Dominance that
ex-VP Cheney boasted of. More
salt was thrown on wounds, as
the inflammatory editorial statement
read "As US politicians
of both political parties are
still shuffling back and forth
between the White House and the
Capitol Hill, without striking
a viable deal to bring normality
to the body politic they brag
about, it is perhaps a good time
for the befuddled world to start
considering building a de-Americanized
world. The cyclical stagnation
in Washington
for a viable bipartisan solution
over a federal budget and an
approval for raising debt ceiling
has again left many nations'
tremendous dollar assets in jeopardy
and the international community
highly agonised."

Xinhua mocked the US role of self-declared
protector of the world. The Chinese
in the last few years have regularly
criticized the USGovt for policy
direction that threatens to devalue
its still growing FOREX reserve
assets. Never before has Beijing spoken with such open challenge, calling for an end to the
reign of King Dollar. See the Intl
Business Times article (CLICK HERE).
Beware that China might
be orchestrating certain events
toward an stuck technical USGovt
debt default in order to enforce
their agenda with USTreasury Bill
redemption in a clever plan. They
might have demanded the Obama Admin
force a state of suspended debt
animation that freezes the all-important
REPO market. It is the life blood
of financial system. The ulterior
motives will be revealed, but the
Jackass is busy in conjecture scenario
analysis with EuroRaj.

◄$$$ UNITED STATES PROMINENCE IS DIM IN ASIA, SLOWLY
VANISHING. THE NEW LEADERS IN ASIA
ARE CHINA & RUSSIA,
READY TO CARRY THE TORCH AND TO
PROVIDE STRONG LEADERSHIP. THE
US-LED DELEGATIONS WILL TAKE A
BACK SEAT. THE MULTI-SWAP IS A
REGIONAL CURRENCY SWAP IN LIEU
OF THE YUAN SWAP FACILITY. MOST
IMPORTANTLY, IT IS NOT USDOLLAR-BASED
TRADE. IT IS BEING PROMOTED FOR
GREATER REGIONAL STABILITY. ITS
INSTALLMENT WILL CAST THE UNITED
STATES INTO AN OBSCURE CORNER,
WHERE IT CAN DEAL WITH ITS OWN
RAPID DECAY. IRONICALLY, THE EMERGING
MARKET NATIONS ARE STILL DEPENDENT
UPON THE WESTERN FUNDS AND INCREASINGLY
THE EASY MONEY FROM THE USFED SPIGOT.
THEIR MARKETS ARE MORE STURDY THAN
THE 1998 CRISIS, BUT STILL NOT
MATURE. $$$

A common foreign currency reserve may be the next big goal among the collection
of Eastern nations. They met at
the Asia-Pacific Economic Cooperation
meeting of finance ministers in Bali on September 20th. The US delegate, the foppish clown John Kerry,
complete with reconstructed jawline
from plastic surgery (better designed
for lying), was relegated to an
obscure corner, or in the closet.
The Skull & Bones entry Kerry
has no experience in global diplomacy,
global finance, or global commerce.
He had no role other than observer
at the Bali
gathering. The picture speaks volumes,
never to have been seen decades
ago during the American Empire
zenith. Notice Kerry in the corner,
with Putin in the center next to
the Chinese and Brazilian leaders.

The APEC member nations have loosely defined the goal
of establishing a common foreign
currency reserve. It would be
key to promoting regional financial
stability. Its champion is the
new Chinese Finance Minister
Lou Jiwei. He said at the APEC conference that multi-lateral foreign exchange swap arrangements
might be put in place to support
economies facing challenges from
external shocks. No additional
details were offered, just a
general project goal. The South
Korean Finance Minister Hyun
Oh-seok was quoted by The Wall
Street Journal as saying the
Chiang Mai Initiative is still
highly important, best to strengthen
it further. The initiative is
a multi-lateral currency swap
arrangement among APEC members
along with China, Japan and South
Korea. Together, these nations
draw from a common foreign exchange
reserve pool valued at $240 billion.
The Yuan Swap Facility serves
as the core on non-USD trade
settlement. China is on trend to growing
the ratio of its trade done in
Yuan, currently over 16% of total
volume expected to reach CNY
4 trillion in full year 2013.
Expect the common currency reserve
as extensions.

An expanded version of the Chiang Mai Initiative could work to promote regional
financial stability among APEC
members. Yi Gang, deputy governor
of the People's Bank of China,
claimed that China has signed
currency swap agreements with ASEAN
nations valued at over 1.4 trillion
Chinese Yuan (=US$229 bn).
Refer to the Assn of Southeast
Asia Nations, a quasi trade zone.
The China-centric financial developments
continue apace. In the first week
of October, President Xi Jinping
announced a Yuan Swap Facility
worth CNY 100 billion between China and Indonesia during
his visit to the populous country
(237 million people inhabiting
17 thousand islands). The facility
will promote trade settlements
in local currencies, with no USDollar
settlement in trade. President
Xi expressed a desire toward establishment
of a bank among Asian countries
to offer support on infrastructure
construction. Its attention would
be directed at ASEAN member countries.
The multi-lateral currency swap
mentioned by Chinese Finance Minister
Lou could be considered as a source
of funding for the infrastructure
investment bank, a future pathway.

However, Luo Jiwei admitted that currency swaps among APEC members face
challenges, such as coordination
among more members with different
policies. Despite cutting
out the United
States by
removing the USDollar in trade
settlement, the US is expected to participate
indirectly. Luo said currency
swaps among APEC members would
require an operational mechanism
influenced by the United States. The debt structure of the APEC
nations is stronger than during
the 1998 Asian Meltdown, as they
boast deeper reserves and somewhat
more mature financial markets.

Moodys Investor Service said in its latest report, "In the five years
since the onset of the global
financial crisis, the performance
of the sovereign ratings of the
members of APEC has, in general,
been of stability and strength." The
same report stated that APEC
members face several new challenges
centered on subdued economic
outlook for developed markets,
aggravated by weak demand for
the region's exports. The renewed
volatility in global capital
markets also puts the region
at risk. Ironically, the emerging
markets are dependent upon the
easy USFed monetary spigot. So
the Taper Talk by Bernanke actually
kicked emerging markets hard
in the gut. Turning off the spigot
or reducing it would bring about
sudden severe financial desert
conditions. The dependence upon
hotmoney is still there. Although
replete with wealth, these nations
do not possess deep sturdy mechanisms,
nor mature financial markets.
See the China Daily article (CLICK HERE).

◄$$$ THE ISOLATION OF THE UNITED STATES CONTINUES, AS THE GLOBAL CORE
INTERNET INSTITUTIONS ABANDON THE
USGOVT GUIDANCE AND DOMINANCE.
HACKING AND CENSORSHIP BY THE USGOVT
AGENCIES MIGHT CONTINUE, BUT THE
LEADERSHIP IS SHIFTING. $$$

In Montevideo Uruguay in
early October, the Directors of
all the major Internet organizations
turned their back on the USGovt
for its leadership. With striking
unanimity, the organizations that
actually develop and administer
Internet standards and resources
initiated a break with three decades
of US dominance of Internet governance. Regard
the initiative as further fallout
from the NSA eavesdropping, the
Snowden database rescue, and abrogation
of liberties toward creation of
the US Fascist State. The global
awareness of USGovt agency hacking,
all blamed on China and Iran, has
worn thin and is widely understood
and recognized. The hack signatures
lie in evidence.

The individual organizations at the Uruguay assembly
included ICANN, the Internet Engineering
Task Force, the Internet Architecture
Board, the World Wide Web Consortium,
and the Internet Society. It
was a complete sweep of all five
of the regional Internet address
registries. The agreement constituted
an explicit rejection of the USDept
Commerce unilateral oversight of
ICANN through the IANA contract.
It also indirectly attacks the US unilateral
approach to the Affirmation of
Commitments, the longstanding pact.
The movement seeks new forms of
multi-stakeholder oversight as
a substitute for US oversight,
although no detailed blueprint
exists. The proper substitute for
unilateral Commerce Department
oversight, it was argued, was not
multi-lateral political oversight,
but an international agreement
articulating clear rules. President
Dilma Rousseff of Brazil is pursuing
the next conference event to be
held in April 2014, the site Rio
de Janeiro. See the Internet Governance
Organization website article (CLICK HERE).

◄$$$ THREE GRAVE ERRORS OF POLICY HAVE KILLED THE UNITED STATES AS A
VIBRANT NATION FROM AN ECONOMIC
STANDPOINT. THEY ARE RABID INFLATION,
WORK OUTSOURCING, AND WAR AGGRESSION.
THE FINAL PHASE WILL CENTER UPON GLOBAL ISOLATION AND USDOLLAR REJECTION. THE DESTINATION
IS A ROCKY TUMBLE INTO THE DISORDER
AND POVERTY, WITH SUPPLY SHORTAGES
AND RAMPANT PRICE INFLATION. THE
BITTER FRUIT OF ADOPTED FASCISM
HAS BEEN ALIENATION, SOVEREIGN
BOND RUIN, AND SYSTEMIC FAILURE
WHICH WILL LEAD TO THE THIRD WORLD.
$$$

Many are the official policy errors committed that have wrecked the United
States.
The focus here is on a few key
major ruinous blunders. The powerful MONETARY
INFLATION (1) has been
the policy of the US for
decades, with corrosive effect.
It destroys capital and encourages
asset bubbles, with a bust inevitable
every time. The motive was to
favor the investment bankers
initially, then to foster the
financial engineering self-destructive
toolkit. The inflation kills
capital on a regular and systematic
basis, which weakened the USEconomy.
At the same time, the US eagerly outsourced industry. The motive was
to exploit the cheaper labor,
but more importantly it was a
reaction to the labor unions
and environmental strictures
that added to cost. In the late
1970 and full 1980 decade, the US bankers had not learned a way to prevent domestic
price inflation. The OUTSOURCING
MOVEMENT (2) weakened
the USEconomy much more. It resulted
in foreign income development
but domestic income depletion.
The entire USEconomy boasted
of becoming a service economy,
but that is a step down. The
benefits of intellectual property
development turned into a capital
formation tool overseas.

Lastly the US has embraced a sick devotion
and love of war. The projects were
pushed by the military industrial
complex, complete with security
agency creation of enemies. Bribery
in the US Senate paved the way
with kickbacks. The security complex
adopted a business model centered
upon narcotics, while demanding
war to serve as cover for the hidden
contraband business. While capital
formation builds an economy, war
is a highly destructive element.
The DESTRUCTIVE EFFECT OF
WAR (3) was the third deadly
blow delivered to the USEconomy.
The income capability of the USEconomy
is insufficient to service the
debt. The rise of the housing & mortgage
bubbles in the previous decade
served as the last hurrah, the
final chapter in a demented distorted
destructive sequence. The United States is saddled
with a gigantic USTreasury Bond
bubble at this final stage, supported
by a more gigantic derivative support
structure. Both are in breakdown
mode, the former visible, the latter
hidden.

The results have been devastating, and will reach climax proportions. Foreign
control of the USGovt debt has
changed the decision processes
in ways that are less concealed
than in previous years. The GLOBAL
ALIENATION from unilateral
monetary policy has created anti-USDollar
movements to remove it as global
reserve currency. Their movements
are as much based on survival as
removal of a toxic paper cancer.
The reaction to constant war footing
and subterfuge is channneled into
trade war dynamics and conflict
with ally and enemy alike. The
last few years have seen a climax
with revealed BOND FRAUD & SOVEREIGN
BOND RUIN. No solutions
are forthcoming. The final phase
has begun, seen in global isolation
and USDollar rejection, observed
in diversification away from USTreasury
Bond, its redemption, and its removal
from the global banking reserve
system. At the same time, in progress
is the decay and demise of the
Petro-Dollar defacto standard.
The FASCIST BUSINESS MODEL
BITTER FRUIT comes from
failure, to be manifested in price
inflation, supply shortage, and
deep disorder. The result will
be profound price inflation from
the currency problems, not directly
from monetary inflation practices.
The result will be broadbased supply
shortages, focused on food at supermarkets,
gasoline at service stations, and
cash at ATM machines. The result
will be systemic breakdown and
USGovt debt default, as violence
spreads across the nation.

THIRD WORLD is the destination, the game over,
the outcome determined, the final
acts playing out according to script.
The US will
slide into the Third
World for its grave errors and
submission to bank syndicate exploit.
The debts are unmanageable and
obscenely large, the political
apparatus broken, the economic
counsel set in place to support
the bank syndicate. The dependence
upon hyper monetary inflation to
manage still rising trade deficits
and government deficits will cause
a deep despair and sense of an
intractable situation, with no
solution. War will be relied upon
to a greater extent, except that
the Modus Operandi is better understood
by the global players, and thus
easier to interrupt. Notice the
block on the Syrian War.

## USTREASURYS AT THE BRINK

◄$$$ THE VOICE SPOKE OF DEBT DEFAULT AND SYSTEMIC CHANGE, ALL OMINOUS.
THE FIAT PAPER CURRENCIES WILL
BE THE MAIN VICTIMS. USTREASURY
BOND FALLOUT UPON A DEFAULT WOULD
BE TREMENDOUS, BROADBASED, AND
SYSTEM CHANGING. THE CHANCE OF
AN INTERNAL INTERVENTION GROWS
BY THE MONTH AS CRISIS BUILDS.
$$$

The following is shared from The Voice, a man of deep wisdom, experience, and
connections. If the United States goes into technical
default with the nearly $500 billion
that come due this month in October,
we shall see the entire global
financial system implode. The USTreasury
has a measly $30 billion cash reserve
left in its booty to manage its
affairs. It will be the Stalingrad
of financial fields. The Boyz might
have planned this very nicely.
The timers are set and the escape
route fixed. But suddenly a big
garbage truck is blocking the final
exit point. Escape becomes impossible.
The timers cannot be defused. It
is a classical Game Over scenario.
The coming correction will be swift,
powerful, and possibly horrifically
brutal. What unfolds will happen
quite differently from what many
well informed people anticipate,
even solid gold analysts. Humanity
is at a crossroad of potential
total annihilation, if a legitimate
reset cannot launch a viable new
beginning. The unfolding events
in the Middle East and inside the United
States will
define how it all will end.

After Syria, the entire geopolitical chessboard changed
completely, with the USGovt losing
credibility and prestige in a
swift stroke. As the crisis marches forward, inevitably we will see both the USDollar and
the Euro currency collapse. What
comes will arrive in four stages.
1) We shall see a sophisticated
barter system ensure that trade
continues. 2) We shall see the
introduction of commodity backed
money with precious metals at
the core. 3) We shall see sanity
return to establish prices for
services, goods, and hard assets.
4) We unfortunately will also
witness a multitude of humans
perish in the foreseeable future
from conflict of a hidden financial
basis, from wars of aggresion
to ensure supplies, and incited
rebellions to remove unwanted
governments and contracts. To
be sure, Paradigm Change is a
bitch. End of Voice comments. A
Jackass footnote focuses on the
effect of a USD and Euro breakdown,
which in no way would lift in
a big way other fiat paper currencies
like the British Pound, the Japanese
Yen, and Swiss Franc. They are
all tainted and lashed together.
Instead, the main USD & Euro
breakdowns would lead to a massive
rise in the Price of Gold (and
Silver).

Kyle Bass, founder and principal of Hayman Capital Mgmt, offered a similar
warning but more specifically directed.
He warned that individual investors
cannot protect themselves from
missed USTBond coupon payments.
In the same interview, he made
a statement to express deep disappointment
on JCPenney for their poor performance
and excessive stock dilution. He
also made a statement to express
how Puerto
Rico would affect the Muni Bond
market in a situation that cannot
avoid a climax soon. See the Zero
Hedge article (CLICK HERE).
For more details on Puerto
Rico, see the Zero Hedge article
(CLICK HERE).

Many people are losing faith in the US institutions,
leadership, and apparatus to govern.
Unfortunately, the true picture
is overwhelmed by treason, which
has become the norm nowadays at
the USGovt helm, managed by Wall
Street. Opposition to the treason
is defined as terrorism and sedition,
punishable by accidental death,
child pornography smear, and No
Fly List entries. The Jackass never
understood why the Praetorian Guard
never stepped in to save Rome
from its leaders. Today, the Pentagon
or CIA does not step in, since
they have been corrupted by the
lustful power of war and the lure
of narcotics. The USCongress does
not step in, since corrupted by
bribery and threats off the war
chest and narco trust fund. The
cancer in the United States is as much from contaminated money,
corrupted banks, and wrecked/retired
capital, as it is from the deep
penetration of narcotics. The
USMilitary brass, the defense contractors,
the devious allies, the Wall Street
syndicate bosses, the Basel syndicate lords, and the Security Agencies
are incredibly devoted to and integrated
with their narcotics business.
It has been developed into a vertically
integrated business in service
to the syndicate, directed toward
the goal of global totalitarianism.
It is the black demonic blood that
circulates and secures power.

◄$$$ JIM ROGERS WARNED THE USGOVT DEBT PROBLEM IS GOING TO END VERY BADLY,
AND THE REST OF THE WORLD KNOWS
IT. THE UNITED STATES FINDS ITSELF
IN DECLINE, BUT HAS NOT SUCCEEDED
IN SOLVING ITS PROBLEMS. FOREIGN
NATIONS ARE ORGANIZING TO INSTALL
THEIR OWN SOLUTIONS IN ALTERNATIVES
TO THE USDOLLAR. $$$

Independent fund manager Jim Rogers has a keen ability to summarize complex
problems in simple terms. When
addressing the USGovt spending
and debt limit problems, mired
in a shutdown, he said "The US has been kicking the can down the road for
60 years. The temporary fix has
happened 18 times. Eventally the
market says 'WE ARE NOT DOING THIS
ANYMORE, NOT GOING TO LEND ANYMORE.'
[Bond] investors are not heeding
the warning. The United States is an exceptional country right
now. We are the largest debtor
nation in world history. No
country has ever has ever gotten
itself this deep in debt, and we
are going to pay the price down
the road. All our creditors and
all the people doing business with
us are too. We are the largest
economy in the world, but we are
in decline and we are not solving
our problems."Rogers went on to describe the solution as making big cuts to federal
spending. But the USCongress conducts
the same old charade of temporary
patches and declared solutions.
In another year or two, the debt
will be much higher and the risks
that much greater, back to the
same point. Foreigners have begun
to react, seeking alternatives
to the USDollar. The are organized.
The Western press is not reporting
on the Eastern path to such alternatives.
See the brief Zero Hedge interview
(CLICK HERE).

◄$$$ THE USGOVT SHUTDOWN HAS SOME CLEAR IMPLICATIONS BUT ALSO SOME POSSIBLE
HIDDEN ANGLES. A RIPPLE EFFECT
WOULD BE DEVASTATING TO THE GENERAL
BOND MARKET. A SHIFT FROM CORPORATE
BOND PAPER TO USGOVT PAPER COULD
RESULT. SOME HIDDEN AGENDA MIGHT
BE AT WORK, GIVEN THE TIMING OF
THE GLOBAL CURRENCY RESET IN PROGRESS
CONCURRENTLY. BIG COINCIDENCES
DO NOT HAPPEN, AS THEY ARE INSTEAD
MANAGED. $$$

If the USGovt shuts down and remains shut down for an
extended period, then Moodys
will be forced to downgrade its
debt. This in turn would lead
to downgrade of Agency debt (Fannie
Mae et al). Later would come the big bank corporate
debt downgrades. For the weaker
giant banks like Citigroup, Bank
of America, and Morgan Stanley,
it would happen by two notches
in downgrade. A chain reaction
would occur. These banks would
be forced to post more collateral,
the result being a required high
grade paper. They would start
chasing USTreasurys, which would
cause a great interior conflict,
since the same big banks would
be busily unwinding their carry
trade in USTBonds. The big
banks would be sellers of USTBond
futures contracts, but buyers
of USTBond securities. If they
were unable to manage the inner
conflict, they would run risk
of sudden death. If more
orderly than the Jackass expects,
then look for China and Japan to
sell heavily into the US-based
buying as they see an opportunity
to dump USTBonds. Expect corporations
like General Electric, Wal-Mart,
Microsoft, and Berkshire Hathaway
to suffer debt downgrades also.
A grand narrowing in the bond
market could result in preference
for USTBonds at the expense of
corporate paper. The process
defines a narrowing Black Hole.

On the currency front, an indication of foreign bond movement, the US DXY index
is flirting with the 80 level.
Any break below has become a question
of when not if, a virtual certainty. The
next phase will be marred by a
grand liquidity drain in almost
all financial markets globally,
with most nations deserting the
USDollar and its USTBond vehicle
as a matter of survival. The
result is predictable, unless participating
within the system. A grand global
outcry will soon be heard for the
USFed to increase QE bond purchase
volume, which would meet the Jackass
forecast. The outcry demands could
arrive by late October. The Jackass
doubts the USGovt will shut down
for a long period of time. My firm
belief is that Obama has a hidden
motive at work, but not known,
in league with Wall Street maestros.
They will find an extension temporary
funding avenue, the usual sham. The
hidden agenda possibly could involve
the Global Currency Reset. Some
power games could be in progress. Reportedly,
pressure is being applied on global
players to restructure a portion
of USGovt debt in the grand reset.
It could be a threat given to the
global investors on default and
total loss, or grand loss in writedowns.
Support the USTBonds or else!!
Perhaps the Wall Street criminal
behemoths have a sick plan at work
to profit from rising Credit Default
Swap contracts tied to the USGovt
debt. They might have a scare in
mind for some quick oversized profits
on the CDSwaps. Time will tell,
as information leaks out.

◄$$$ THE NATURE OF THE INTEREST RATE SWAP CONTRACT REVEALS WHY THE USFED
IS STUCK AT 0% FOREVER, OR UNTIL
THE USGOVT DEBT DEFAULT. SWAPS
DETAILS ARE DESCRIBED WITH DYNAMICS,
THE INNER WORKINGS. THE EXCHANGE
STABLIZATION FUND (RUN BY THE USDEPT
TREASURY) CONTROLS THE BOND MARKET.
THEIR ACTIVITY RESULTS IN BANK
PURCHASE OF USTBONDS IN FINAL DEMAND,
BUT THROUGH ARTIFICIAL MEANS TO
COMPLETE THE LOOP.
IN ESSENCE, THE E.S.FUND GATHERS
IN NATIONAL WEALTH AS IT IS DRAINED
OFF DURING THE CAPITAL DESTRUCTION
PROCESS, IN A BIZARRE ZERO SUM
GAME EXERCISE. $$$

Many are the reasons why the United States and Western
world are stuck at 0% forever.
The simple apparent reason is that
the economies, businesses, and
borrowers could not manage a substantial
hike in interest rates. However,
the bigger story lies in the management
of the USTreasury Bonds and thus
the USGovt debt. Recall that in
the six months during second half
2011, Morgan Stanley put on $8.5
trillion in Interest Rate Swap
contracts. A false flight to
safe haven was created. In doing
so, the Wall Street masters trapped
themselves, and ensured a USTBond
asset bubble, complete with
follow-on collapse, the climax
being a USGovt debt default and
restructure. In a strange way,
the USDept Treasury with its powerful
Exchange Stabilization Fund is
the counter-party to such derivatives.
Better described, the ESFund instigates
activity in the bond market. My
understanding (surely less than
complete) is that the Interest
Rate Swap contract is a spread
trade short-term versus a spread
trade long-term which produces
artificial long-term bond purchases
based upon free money initiated
from short-term borrowings. Thus
no counter-party, but managed by
JPMorguen and given oversight by
USDept Treasury. THEREFORE THEY
REQUIRE THE ZERO PERCENT FED FUND
RATE TO KEEP THE VAST DERIVATIVE
MACHINERY GOING. The nasty
rub is that they are stuck at 0%
forever. Great strain would come
if the cost of running the critical
IRSwap machinery rose. Actually,
the USGovt debt default will occur
eventually, surely before forever
arrives. Take a closer look at
the inner dynamics, always a fascinating
glimpse within the Matrix, provided
by two experts in the fixed income
and bond markets.

EuroRaj has firm experience with the Indian, Turkish, and Iranian economies
with related markets. But he also
has London
experience in its vaunted banking
sector. He shared his viewpoint
in a simple understandable format
for Hat Trick Letter readers benefit.
He explained the Interest Rate
Swap to the ordinary person. What
follows are his thoughts, my edits
for prose. Let us start by defining
the two counter-parties in the
IRS swap, the USDept Treasury and
Cabal of banks that own the USFed.
The USTrez goes long on the 10-year
bond, using this as an example
for the swap rate. This means that
the UST pays the 3-month LIBOR
rate, and the UST receives the
10-year swap rate. Keep in mind
the 3mo LIBOR is virtually free.
The Cabal banks pay the 10-year
swap rate and the Cabal banks receive
the 3mo LIBOR rate. Therefore,
the USDept Treasury is long 10-yr
rates and uses the swap to suppress
rates, which sustains the system
and fosters the asset bubbles. The
talk of fostering economic growth
is all klaptrapp nonsense. In the
process, the USTrez uses tax revenues
to pay the 3mo LIBOR rate. They
supplement their purchases with
free money at the USFed window.

From a big picture perspective, one can regard the USGovt tax revenues to be
a derivative as they are dependent
upon both the nation's productive
revenue and income generating activity,
as well as the ability of the government
to levy tax and to collect taxes.
This means that the USTreasury
Bond itself is a derivative of
a derivative. Consider the dynamics
at play. As the tax base shrinks,
the USDept Treasury requires lower
and lower rates to support its
own derivative mountain and to
foster growth through aseet bubbles. What
ugly irony! By creating inflation,
it boosts nominal growth and supposedly
expands the tax base, but it also
kills productive capacity which
ultimately matters in the long
run. The reported growth is mostly
inflation, with grand distortions
since the CPI and related deflators
are rigged. The last five years
have been an attempt at boosting
nominal growth, not met with any
success whatsoever. The USEconomy
is contracting even without the
phony inflation boost. The gigantic
problem is that the USFed wishes
to taper the QE bond purchase volume,
since it has created a $4 trillion
toxic balance sheet. They cannot.
In the meantime, an $800 trillion
derivative problem has emerged.

The solution to the problem is two-fold. The USGovt must increase taxes by
raising the tax rates, and by expanding
the tax base, even by closing loopholes.
Instead, they could devalue the
USDollar and work to encourage
nominal growth again. The futility
is evident to any alert student
of economics and finance. Raising
taxes reduces the tax base by draining
of capital. Worse, any USDollar
devaluation would give a massive
boost to price inflation and raise
the cost of households and businesses
alike. The usual lie is to call
any nominal growth that comes as
true growth, and to suppress the
reported CPI and deflators. Thus
inflation is the perceived solution,
and the lie on inflation provides
the proof of policy success. The
lie has been regularly doled out
to the sleepy public and compromised
investment community for 30 years.

Both the USDollar currency and its USTBond vehicle are utterly screwed. After
the systemic breakdown, after the
USGovt debt default with restructure,
after the introduction of a new
Gold Trade Settlement system, the
Price of Gold will find easily
the $3000 mark, then the $7000
mark, and even surpass the $10,000
mark. The final reset is not a
pie in the sky number from the
tin foil hats, but reality in the
face of an intractable USD/USTB
financial structure poised to collapse.
The critical point is extremely
vital, as the Wall Street control
room must create artificial demand
for USTreasury Bonds while maintaining
suppressed rates. The Exchange
Stabilization Fund is run by the
USDept Treasury, under JPMorgan
operations. It is outside the jurisdiction
of the USCongress. The ESFund
is being used to suppress rates
rather than to control activities
globally, in a sense the cabal
has lost power already. The
scarce resources are being drained
at home rather than being utilized
in any efficient market, either
in the economy or the financial
platforms. In a sense, the ESF
is stuck in a slow burn rate toward
the bankruptcy destination.

Rob Kirby joined the derivative discussion to add some fine points. His points,
my edits for prose. The fixed versus
floating aspect is explained adequately
above. However, a very important
part to the picture must be described.
This part has been covered in past
Hat Trick Letters, but is crucial
and warrants repeating. In a regular
inter-bank interest rate swap contract,
the payer of fixed and the receiver
of fixed each exchange the underlying
notional amount of bonds in the
cash market, because banks are
spread players. When the Exchange
Stabilization Fund does Interest
Rate Swaps with banks, they are
always a receiver of fixed portions
to the swap. They do not provide
the banks (payers of fixed) with
the bonds. The end result is the
ESF action forces the banks as
spread players to purchase the
bonds in the cash market. Thus
the artificial demand in USTBonds. It
must arrive to clear the market
after the massive ESF activity.
The majority of bond and bank and
fixed income analysts do not comprehend
this important component and end
result. The ESF forces the banks
to compensate by purchasing USTBonds,
an artificial dynamic. The Failures
to Deliver are related, but leave
that topic alone here.

These trades are hugely profitable for the banks and the USDept Treasury. The
profit accrues to the ESFund itself,
which does not publish financials.
The banks make out like the thieving
bandits from this trade also. The
real losers in the entire derivative
machinery exercise is the pension
system, the insurance companies,
the army of savers, and those who
use bond funds in their IRAs, 401ks,
and Keoughs. Some analysts
might point to inherent risk, but
there is none to the players within
the ESFund and its derivative machinery.
The USDept Treasury is happy to
take the naked long-term rate risk
because they are paying the cheap
floating 3-month LIBOR rate. The
USGovt control room knows that
rates are never going to be allowed
to go up. They will not go
up, because they set the Fed Funds
rate and money market rates arbitrarily
using offices run by the same players.
The reality is that the USDept
Treasury and JPMorgan operators
truly control the entire curve. The
zero rates will continue until
the system hyper-inflates or the
USEconomy capital base is destroyed
or the USTreasury Bond complex
collapses from global isolation,
wrecked by its own financial engineering
gone haywire. Of couse, as
Kirby points out, the end result
could be a nuclear war since these
sadistic sociopathic bastards are
never going to stand down, never
to relinquish power. They will
wreck the table rather than concede
the game.

In closing, Kirby disagrees about the Exchange Stabilization Fund ever going
broke. Kirby even reckons the
ESFund is worth many more $trillions
than the Treasury shows on its
books in debt, thus very solvent
and profitable during the entire
systemic collapse. In fact,
the ESF net worth is captured in
the Comprehensive Annual Financial
Reports. It was no coincidence
that the same piece of legislation
that created the Exchange Stabilization
Fund back in the 1930s also created
the precursor to the CAFR. Criminals
such as those in US power
always keep meticulous records,
like the Nazis did in Germany. In fact, they are
descendents along the same Nazi
bloodlines. As footnote, indications
build that the ESFund has the long
side on many of the Big Bank gold & silver
short futures contracts. The
ESFund in essence is a gathering
vat to hold the entire national
wealth as it drains off, and the
USEconomy is destroyed, its capital
drained. Try including the
above discussion in a graduate
school Economics program at Harvard,
Yale, Princeton, Chicago, or Stanford!! In an exercise of pure hypocrisy, 60 US Senators
signed a formal letter protesting
Japanese currency manipulation.
The isolation of the United
States grows
with its two-faced behavior. Desperation
is on the rise. Contrast the Senatorial
protest with the ESFund activity.
See the Zero Hedge article (CLICK HERE).

A tremendous quote came from Rob Kirby, lastly. It is of a slight personal
note since he worked in the Bay Street bond arena. It pertains to the scummy
derivative market that spins off
gigantic fees since volume is in
the $trillions. He said, "The
Goldman Sachs whistle blower lawsuit
against the New York Fed is not surprising at all. I have good friends who can
be regarded as fine people who
either work in the derivatives
complex at banks or still indirectly
draw a huge living from their allegiances
from working there. I am talking
about men who have families, enjoy
taking 2 to 4 exotic vacations
per year, have kids in private
schools, belong to 1 to 4 country
clubs, have 2 to 4 houses, in some
cases have mistresses and not to
mention exotic cars and/or exotic
toys or habits such as drugs or
fine wine. If they speak out with
the truth, everything mentioned
above is gone, toast. Then they
also lose their wives, the right
to see their kids. For many of
these people, this is simply too
high a cost to pay." So
the derivative casino continues
to turn its tables. See the Zero
Hedge story with interview of Rob
Kirby (CLICK HERE).

EuroRaj pitched in for an obscure but relevant factoid. The $600 to 700 trillion
in total derivative contracts (or
perhaps $1200 to 1500 trillion
in total swaps) has potentially
an annual turnover of more than
$3000 trillion ($3 quadrillion).
The unproductive trade generates
staggering fees for the parties
involved. The big US and London banks are the beneficiaries. Ironically, some of the profit
goes down the toilet in order to
cover derivative accident losses
like from the fast rise in long-term
USTBond yields seen this spring
and summer. The London
Whale losses in 2012 were $100
billion, not $9 billion. The derivative
losses in 2013 are an order of
magnitude larger, without doubt.

On the private investor side, big losses are realized regularly in futures
managed funds. The moral of the
story is to buy the physical metal,
not the futures contract. The entire
futures arena is a rigged fiat
con game. See the Bloomberg article
on managed futures fund losses
(CLICK HERE).
It is a fool's game. The lunatics
are truly running the asylum. They
are planning a new potential USTreasury
Bond security which would be of
higher seniority, the super premium
bonds. The Euro Central Bank tried
the same maneuver under maestro
Draghi, with no success. The courts
even ruled them illegal. Many are
the extreme machinations to keep
the circus rides running and the
tables turning. See the Business
Insider article (CLICK HERE).
Note the new US$100 bill was launched
on October 8th, with little or
no fanfare. It will be studied
when information is available.

◄$$$ THE REPO MARKET APPEARS TO BE THE MOST CRUCIAL OF STRESS POINTS.
THE USFED MONETARY EXPANSION IS
TOTALLY OUT OF CONTROL. ANY UNWIND
OF THEIR BALANCE SHEET WOULD RESULT
IN A GRAND FLOW OUT OF PAPER ASSETS
AND INTO HARD ASSETS. EXPECT A
RACE FOR PRECIOUS METALS, IN ADDITION
TO OTHER GROUPS LIKE ENERGY DESPOSITS,
BASE METAL MINES, AND FARMLAND.
$$$

The USFed is tragically stuck, a theme described in regular detail for five
years in the Hat Trick Letter.
The housing market weakness and
the horrendous drag associated
with mortgage backed securities
have acted like a grand ball & chain
for the USEconomy. The REPO
market appears to be where the
stress is most threatening, under
the surface. These $trillion daily
transactions serve as the lifeblood
of world financial markets. It
is under tremendous strain. The
underlying economies are threatened
from the fallout in financial platform
collapse. The USFed can only supply
the much needed REPO market collateral
through deficits. The system is
caught in a war against capital,
and a war for securing supplies
overseas. The resulting stimulus
to the USEconomy is fatally flawed.
The resulting zero bound in interest
rate is to continue without end.
The USFed has no ability to taper
the QE bond monetization volume.
The central bank is stuck in hyper
inflation gear. Its most recent
experiment on tapering the QE volume
turned out to be a major fumbling
event in full view, but it won
political support for QE to Infinity
(my forecast).

The monetary expansion is totally out of control. It is not flowing into the
general economy in any way shape
or form. It is exclusively going
into the financial markets toward
bonds and stocks. Hidden is the
flow into derivative loss coverage.
The equity market has advanced
to all-time highs despite the clear
entrenched recession. Any claimed
signal of imminent economy revival
makes a laughing stock out of the
analyst. The recovery is always
imminent, never to arrive. In contrast
to the perceptual distortions from
such stock rises, there remains
a crucial confidence enabler. The
big banks are devoted to leveraging
their credit games via capital
markets, not from their unused
reserves or traditional lending
practices.

Any exit by the USFed in sharply reduce QE volume would likely result in the
immediate collapse of stocks, as
$2.2 trillion in marginalized credit
has been injected into the capital
markets. The entire derivatives
house of cards would cause a financial
nuclear event, since linked intimately
with that enormous bubble. The
certain consequence would be an
urgently required huge bailout
of financial pillar institutions
(the regular suspects for bank
welfare) and further rounds of
monetary expansion. The USFed is
stuck with its foot on the pedal,
using nitroglycerine as fuel. It
cannot afford to permit the leveraged
$2.2 trillion in added marginal
credit to unwind. If such an
unwind reversal process does commence,
the markets will be treated to
the mother of all flows away from
paper security assets and into
a wide assortment of physical assets
led by Gold & Silver and energy. The
event would serve as the shot heard
around the world, clearly heralding
the end of the long deferred fiat
monetary experiment. See the Resource
Investor article by Jeffrey Lewis
(CLICK HERE).

◄$$$ IMPACT OF UNWINDING TO USTBOND CARRY TRADE. NO MONEY ON TABLE TO
ENTER STOCKS. INSTEAD, HUGE MONEY
DRAIN FROM WRECKED ARBITRAGE ON
INTEREST RATES. THE BIG US-BANKS
ARE BEING DRAINED OF THEIR LIQUIDITY
AT LIGHTNING SPEED, PRECISELY WHEN
THEY MUST DEFEND THEIR LEVERAGED
POSITIONS IN DERIVATIVES. A FINAL
STAGE IS IN OCCURRENCE, ESPECIALLY
GIVEN THE FOREIGN ABANDONMENT.
$$$

The great unwind cannot occur. It will not be permitted to occur. The bond
yields cannot rise, or else a disaster
occurs. The unwind of the leveraged
USTreasury Bond market is unlike
past credit cycles. This time is
different, since the bond investors
are not individuals and institutions,
but Wall Street with heavy leverage. To
be sure, the Big US Banks are losing
huge amounts of money in their
leveraged bond positions. They
love leverage, due to greed and
juice. They prefer bond futures,
just like they prefer the S&P
futures contract, and just like
they used to prefer their mortgage
bond REMIC invention. Their past
track record and preferences are
well known to the financial engineering
industry. The concept of unwinding
leverage with bond introduced the
Convexity term. The bond market
will tend to overshoot as it unwinds.
Going further, Wall Street saw
fit to expand into the leveraged
Collateralized Debt Obligations
(CDO), which imposed leverage upon
the leverage. These corrupt pillars
even called it squared leverage.

Some naive investors believe the USTBonds being sold
will release new funds directly
into the US Stock market, even help
to revive the USEconomy. Not
so! As the leveraged USTBond positions
are unwound, they will not release
vast funds into the financial
markets or the economy. The reason
why is simple. They are spread
trades. As the wrecked spread
trades (short the USTBill and
long the USTBond) are unwound,
they are big BIG money losers. So
to close out the USTBond futures
carry trade, they must bring
money to the table, big money,
even some USFed aided money. In
futures trading, they are marked
to market. They are not carried
on the books at book value, as
some errantly suggest. Not the
futures contracts that Wall Street
banks are so fond of, with a
30 to 40 year history. The big
banks can conceal their losses
only for the USTBonds held without
leverage. The ten year maturities
are almost never held to maturity,
an absurd notion on its face.
Thus the motive to conduct Operation
Twist by the USFed in 2011 and
2012. The foreign holders of
long-term USTreasurys shifted
to shorter maturities, so they
could wait out the destructive
USFed monetary policy, and be
paid off at maturity of the bonds,
not a difficult sale. Sale
by big banks of USTreasury Bonds
is an action that generally reduces
liquidity available to the big
banks, which puts tremendous
strain on their ability to manage
the interest rate derivatives,
since they are losing capital
at hyper-speed. The death
of the big US banks is near,
made more likely (if not certain)
by carry trade losses, disastrous
leverage, and foreign abandonment.

◄$$$ ERIC SPROTT OPENLY CALLS THE FED AS HAVING LOST CONTROL OF THE BOND
MARKET. TAPER TALK RESULTED IN
A NEAR DOUBLING ON BOND YIELDS.
AN ACTUAL TAPER IN QE BOND VOLUME
WOULD RESULT IN A TOTAL ROUT WITH
CARNAGE AND A SYSTEMIC FAILURE
EVENT. $$$

Eric Sprott gave a direct interview to the Silver Doctor. He used plain language.
He expects no tapering of QE volume.
He believes against the backdrop
of the US fiscal debt crisis, the USFed could not taper
the volume of official QE bond
purchases because it has lost control
of the bond market. He said, "We
have never printed on a daily basis
more than we are printing right
now. All the while, interest rates
doubled! Just the talk of tapering
moved the rates significantly higher.
I happen to believe that they have
lost control of the bond market.
Just by talking the talk, the rates
doubled. If they walked the walk,
I think we would see a dramatic
increase in rates here and severe
carnage in the bond market." Sprott
went on to claim that the paper
gold market was crushed by the
Western Central banks this spring
in order to free up gold supply
from the strangled and captured
Exchange Traded Funds, as a massive
gold shortage threatened the bullion
banking system. He judges the
battle to be one the Western Central
banks are doomed to lose, as global
physical demand will continue to
overwhelm central bank supply.
The biggest losers in the process
are the dopey nitwit sleepy braindead
who invested in the GLD Fund or
SLV fund, thinking they actually
owned some Gold or Silver bars.
They owned nothing but paper certificates
in a scheme that served the banker
cartel. The GLD fund is seeing
its inventory depleted in Satan's
service. See the Silver Doctors
article (CLICK HERE).

◄$$$ USFED MEMBERS JUSTIFIED MORE VOLUME ON THE OFFICIAL BOND PURCHASE
PROGRAM. THE TWIN FACTORS OF WEAK
USECONOMY AND WEAK LABOR MARKET
WILL PROVIDE ALL THE NECESSARY
JUSTIFICATION. THE CURRENT USFED
POLICY ASSURES THE JUSTIFICATION,
DUE TO RESTULTANT CAPITAL DESTRUCTION.
$$$

Rob Kirby warned a month ago that profound weakness in the USEconomy would
permit the long-term USTBond yields
to be pushed down by the available
tools at hand by the bank cartel.
Early signals are proving his viewpoint
to be correct, as two USFed players
are talking down the economy in
clear terms. The doves are New
York Fed William Dudley and Atlanta
Fed Governor Dennis Lockhart, with
some background refrain provided
by St Louis Fed Governor James
Bullard, who called tapering an
outright tightening event. The
irony is thick, as USFed monetary
policy is weakening the USEconomy
in capital destruction due to the
rising cost structure in feedback
response. As the USGovt economist
harlot morons talk of a recovery,
the Fed Governors must argue on
economic weakness to justify greater
QE bond volume. Policy makers
do not even realize they are caught
in a vicious cycle, causing a Black
Hole for USTBonds and a Toilet
Bowl for the USEconomy. The
Jackass forecast of doubled QE
volume will be an easy forecast
to turn correct.

In late September, timed almost exactly with the Bernanke submission speech,
where he backed off on any reduction
in QE bond purchase volume, a chorus
was heard by doves singing in unison.
Not only did they explain the reasons
behind Bernanke's taper reversal
the week before, but they provided
justification for amplified QE
in what might next be called QE4,
to be announced by year end or
very early 2014. Dudley said the USFed must act forcefully to push against headwinds,
that it might take considerable
time to reach the 6.5% jobless
level, that the USEconomy still
needs very accommodative policy.
Lockhart added to the chorus. He
said the USFed focus should be
faster economic growth, that some
slowing in US payroll
growth has been seen. Both men
attempted to sound intelligent
and alert, when their past decisions
helped to create the intractable
crisis that requires hyper monetary
inflation to avert a collapse. They
missed all past signals of asset
bubble creation, and all signals
for their bust. They are system
wonks, mere henchmen in dutiful
service to the bank cabal. They
are far less intelligent than they
seem, and poorly educated. They
compensate loyalty for capability.

These corrupted bankers speak of achieving the dual mandate objectives of maximum
sustainable employment in a context
of price stability. They have added
the third mandate of stable financial
markets. They achieve none of the
three goals. They cite metrics,
none of which will be achieved.
Thus QE to Infinity, with rising
volume. Now they are stuck with
increasing volume of QE bond purchases.
Pathetic!! They do not mention
the obvious missing piece this
cycle, that a critical mass of US industrial base was shipped to China. See the Zero Hedge
article (CLICK HERE).

## DEFENSE OF THE USDOLLAR

◄$$$ SAUDIS BRACE FOR A NIGHTMARE OVER US-IRAN DETENTE. THE DOMINOES
ARE LINED UP FOR IMPORTANT FALLOUT
THAT ALTERS THE GEOPOLITICAL LANDSCAPE.
THE ULTIMATE VICTIMS WILL BE THE
PETRO-DOLLAR, THE USTREASURY BOND,
AND THE USECONOMY. $$$

Saudi princes now believe the United States is betraying
them. They are angry at the United
Nations for not reprimanding Syria. They see rivals gaining
ground across the Arab world. The
USGovt must make nice with Iran, and produce a rapprochement
of sorts in eased tensions. The
world demands it. The Petro-Dollar
is at risk. The Saudis will be
pushed into Russian & Chinese
hands further, ensuring the demise
of the Petro-Dolllar. In the
process the USDollar will lose
its global reserve status. The US will
become deeply isolated, later to
fall into the Third
World. The dominoes are falling,
and nothing can stop them, the
momentum tremendous. The Saudi
leaders understand this, and are
justifiably worried. The fall of
the House of Saud is coming, not
this year, not next year, but in
the next few years. The Saudis
sense the change in the geopolitical
winds, something the Jackass has
sniffed since 2010 when the Arab
princes convened in Abu
Dhabi to decide on the new Persian
Gulf protectorate offered by the Russia & China duo.
Neither alone can dominate the United States, but together they can.

A key missing note was heard when Saudi Arabia's Prince Saud
al-Faisal, the veteran foreign
minister, failed to make an annual
address to the United Nations
General Assembly in early October
for the first time ever. It means the Saudis are angry and
worried. For years, the Saudis
have preferred backroom politicking
to the public arena, but they
always made a statement before
the UN forum. As the future of
the Middle East is in development,
the Saudis are furious that the
international body has taken
no action over Syria,
where they themselves and Iran back
opposing sides. Their anger is
not directed at China and Russia,
which obstructed initiatives
at the UN Security Council. Instead,
their fury is directed at the United
States,
whose policies they see as weak
and simplistic. Experts believe
the alliance between the United
States and
Saudi Arabia,
the Islamic monarchy that dominates
oil supplies, is not about to
break. The Jackass disagrees.What
is heard qualifies as merely
politically correctness at work. The
two nations have been at odds
over Egypt since the
Arab Spring began. In fact, Saudi
factions and support overthrew
the US puppet Morsi.

The Saudis have a mortal enemy in Tehran with Shiite Muslims, for their divisive
beliefs and aid in revolt. A major
turn has occurred. Already aghast
at USGovt reluctance to more vigorously
back the rebels fighting against
Syrian President al-Assad, next
the Saudi princes were horrified
to see Washington
reaching out to Hassan Rouhani,
the new Iranian president last
month. The Syrian regime is Tehran's
strongest Arab ally. Although any
meaningful US-Iranian full rapprochement
seems unlikely, Obama telephoned
the moderate Rouhani during the
United Nations General Assembly.
It was an unusual outreach, founded
in weakness, not in goodwill.

The Saudis are concerned the Obama Admin might work to thaw ties with Tehran
by striking a deal to expand inspections
of its nuclear sites in return
for not obstructing Iran and
its allies. They wish to proceed
with Arab nation interference,
such as in Iraq, Lebanon,
and Syria. The
USGovt is balancing interests in
the region versus Saudi friendship.
But the risk is for the United
States to
lose on both counts. The Arab
Spring has backfired, most notably
in Egypt. The Saudi regime is
an unstable powderkeg, with legions
in prison for political crimes
and Islam opposition. Some point
to rising US domestic oil output as relaxing the US-Saudi
ties. If Shale energy strategy
is the basis of such relaxation,
then the US is
in big trouble, since Shale is
a Ponzi sham even the big US oil firms do not believe in. The Russian-brokered
deal to dismantle Assad's chemical
weapons and thus avert air strikes
was a bitter blow for Riyadh.
The main Saudi strategy in Syria had
been to coax its American ally
into the war. The chemical weapons
were purchased by the Saudis from
British firms, and used on a limited
basis outside Damascus.
The event was blamed on the Syrian
loyalists, again typical US propaganda with a Western
echo. Assad loyalists have no chemical
weapons, and Russia supplied them none.

The divisions with the US involve specific weapons
shipped to the Syrian battle. Several
analysts and diplomats in the Gulf
claim the Obama Admin had pressed
the Saudis not to deliver significant
weapons such as surface-to-air
missiles to Syrian rebels, fearing
they would fall into the hands
of the Islamist militants. The
Saudi princes had been at odds
in their steadfast US support.
In recent weeks, the Saudi rulers
are to consider going their own
way, since minor divisions have
receded. Full outright opposition
to USGovt policy has resulted.
Mustafa Alani is an Iraqi analyst
at the Gulf Research Centre in
Jeddah with close ties to the Saudi
security establishment. He said, "There
is not even one senior prince sympathizing
with Obama any more. They think
he has lost his head." Deep
conflicts have arisen between the
Saudi princes and the Obama Admin
over the entire Arab Spring rebellions
orchestrated by the CIA. They
toppled autocrat strongmen regimes
that were friendly to the Saudis.
The US agenda is diverging from that of Saudi Arabia. The US-Saudi
relationship has been one of the
most enduring in the Middle East. Times are changing. The allies are at odds, and the friction
will intensify.

Conflict over actions in Egypt made a break in the
Jackass view. Since the overthrow
of Mubarek and Morsi, followed
by outsized Saudi aid to replace
the lost USGovt aid, the Saudis
seem inclined to push against formal US policy
in other areas, particularly on Syria.
Mid-October marks the 40th anniversary
of the Arab oil embargo, which
eventually resulted in the Petro-Dollar
birth and Arab oil surplus recycle
into USTreasury Bonds. The defacto
trade standard is old and fracturing,
beset by stresses and the emergence
of the Eastern
Alliance of G-20, BRICS, and SCO.
The United
States is
going to lose the Petro-Dollar
foundation, while it pursues greater
goals that help to hold power and
supply routes.

The ultimate victim of the Obama Admin policy in the Middle
East will be the demise of the
Petro-Dollar defacto standard. Its obsolescence and gradual demise will force the isolation of the US, a tremendous final phase stress on the USTBond,
thus opening the gates to price
inflation with shortage to the
USEconomy. The rise of the Natural
Gas Coop led by Russian Gazprom
will be the final killshot blow
to the Petro-Dollar. In the aftermath,
the Saudi regime will fall or
be totally revamped as the princes
scatter. See the Reuters article
(CLICK HERE).

◄$$$ BIG POTENTIAL CHANGES ARE COMING FOR CRUDE OIL, WHICH HAS BEEN THE
OBJECT OF DEEP PRICE SUPPRESSION.
THE UPCOMING OIL PRICE RISE (ABOVE
BRENT) SIGNALS THE DAMAGE FROM
THE USFED MONETARY POLICY AS WELL
AS GROWING ISOLATION OF THE UNITED
STATES. THE CLIMAX EVENT FROM SUCH
A WEST TEXAS
OIL PRICE GAIN WILL BE THE COMING
DEMISE OF PETRO-DOLLAR. THE BRENT
OIL PRICE PREMIUM HAS GONE AWAY
WITH THE SYRIAN WAR THREAT. DOMESTIC
FACTORS WILL NEXT DOMINATE. $$$

The Brent vs West Texas oil price spread has been a topic of Jackass interest,
not discussed much in the US financial press. The plunge
in the spread was related to US
infrastructure and technical issues,
then later more to the war premium
due to Syrian conflict. Pierre
Andurand (ex-Goldman Sachs) manages
one of this year's most successful
commodity hedge funds. He forecasts
the US crude oil price will rise above the Brent
benchmark within weeks, counter
to the consensus expectations. His
focus is on the Cushing inventory
in Oklahoma.
He said, "In order for
Cushing inventories to stop drawing
and start building, WTI [the US oil benchmark] should
be at a premium to Brent [the European
benchmark]." The indications
in the futures market point to
US oil continuing to trade at a
discount of $3 to $4 per barrel
for the rest of the year. The West
Texas oil price had traded at a
steep discount of $15 to $20 to
Brent for several years as a US surplus
weighed on US prices, while Wall
Street pushed down prices using
the Platt desk. But the discount
narrowed sharply this year as pipelines
opened to transport crude from
storage tanks at Cushing Oklahoma
to refineries around Houston.

The expert Andurand argues that Cushing, the delivery point for WTexas, is
dealing with oil supply shortages,
which should lead the US benchmark
to trade at a premium to draw crude
back into storage. He estimates
a minimum of 20 million barrels
is required to prevent damage to
the network of tanks and pipelines
around the town, a level that could
be reached within weeks. Furthermore,
very little of the oil remaining
at Cushing is of the high quality
stipulated in the WTI contract.
Lower quality usually means heavy
contaminants or high sulfur content.
See the Zero Hedge article (CLICK HERE).

The Jackass addition is that the Shale fields are not producing as much as
anticipated, neither oil nor gas.
The big oil firms are packing up
and leaving the MidWest and Dakotas.
The oil supply should worsen, lifting
price. Shale depletion is a growing
story, as the USGovt hype fades
away. Almost nothing the WashingtonDC
clowns discuss, promote, or support
is of value or substance, certainly
not for investment. Their favorite
play in 2009 and 2010 was green
energy, where corruption was later
exposed. See the Zero Hedge article
(CLICK HERE)
on the Bakken hype versus the dismal
reality. It should be nothing new
for those who have been following
Steve StAngelo, aka SRS Rocco.

The commodity fund manager Andurand is probably correct, but his reasoning
is rather sparse. He surely does
not wish to give away his trade
secret, namely forecast analysis.
Let us examine what could be the
prominent factors behind a WTexas
oil price surge. As preface,
examine the reasons why oil inventories
need to be built at Cushing, especially
when no significant USeconomic
growth is evident or on the horizon.
Focus initially on prevention,
like to prevent price inflation
and to support asset bubbles. The
bank syndicate has been drawing
down inventory through the summer
as part of their regular price
suppression project, as lower oil
price aids the pathetic USEconomy
non-recovery and keeps a lid on
systemic prices across the nation.
The direct motives would be many,
such as a) to assist the housing
bubble restart, b) to show no impact
of all the warmongering in the
Middle East, c) to prevent the
student loan and auto loan bubbles
from bursting, d) to mask the isolation
of the USDollar while being rejected
globally, e) to assist the stock
bubble in S&P and Nasdaq, and
f) to nurse along the USTreasury
Bond bubble.

The oil inventories need to be built soon in order to deal with imminent threats.
The obvious reason is that oil
inventories are dangerously low. The
main reason (overarching factor)
is that the USFed will ramp up
QE sooner rather than later, with
clear indications likely in Q4
when official bond purchases accelerate,
to be dubbed QE4. The WTexas oil
price will rise above the European
standard Brent because of USDollar
isolation. Two other reasons
stand out. The Shale energy projects
are not producing what it promised,
a veritable wreck. Also, the hurricane
season is in swing with winter
coming soon. The smart money will
continue to hedge against the debilitated
USDollar as the USTBond vehicle
suffers gradual abandonment through
diversification and redemption. If
the WTexas oil price rises to show
a premium over Brent, regard the
signal as loud and clear, as prelude
to the death of the Petro-Dollar. The
Obama Admin will soon be forced
to allow the Keystone Pipeline
completion. The Wall Street banks
will probably have the last opportunity
to dump their long WTI contracts
on the crude buyers. On an increasing
basis, the WTI crude oil price
has become a meaningless metric.
Thanks to EuroRaj for many thoughts
toward the analysis.

◄$$$ BIG MONEY IS URGENTLY SEEKING HARD RESOURCE ALTERNATIVES IN SOUTH
AMERICA, AUSTRALIA,
AND ESPECIALLY AFRICA.
AN HISTORIC USDOLLAR DEVALUATION
IS NEAR. IT CANNOT VIABLY BE DONE
VERSUS OTHER EQUALLY IMPAIRED PAPER
CURRENCIES. IT WILL BE DONE VERSUS
GOLD, IN ORDER TO RESTORE THE GLOBAL
BANK SYSTEM SOLVENCY. $$$

The Voice, a stern reliable brilliant gold trader, offered some information
on diversification trends. He refers
to defensive action taken in the
face of deep currency debasement
by all major central banks. "The
Consortium, as well as some very
well connected Anglo & American
bankers, are well known for their
ruthless business practices. They
are busy planning for the ineviable
collapse. Their billions of
US$ cash monies are trying to escape
the coming debasement. We anticipate
the US$
being devalued by the US government
by 50% overnight in the not too
distant future. Once viewed
as extreme, the big overnight devaluation
is growing in probability, due
to Fed ongoing QE monetizations
and intense pressure from points
around the globe to address the
stubborn bank insolvency problems.
So these liquid US$ are frantically
looking for hard assets, commodity
based investments to be parked
and converted safely all across
the globe. They have been seeking
assets in Australia and Africa for
a full decade. Now they are avidly
searching in South
America." If the USD were
devalued by a significant amount,
the USGovt debt might find some
buyers. If the USTBond yield were
higher, the USGovt debt might find
some buyers. These are some very
basic market dynamics at work.
The fiat paper currencies will
move together as a crippled group,
a broken marching band. They will
fall versus the Gold price, each
go to one knee, and salute the
King Gold.

Inside the United States, a great silly distraction is taking
place centered upon the feeble
ObamaCare funding. The more intense
conflict is over the USGovt budget,
which dares to face a debt default.
The distraction on the domestic
front takes attention away from
the global pressures. The bigger
issue is the sudden overnight 50%
USDollar devaluation. The threat
of a shutdown acts as the smokescreen
that provides cover for the real
problem, an overvalued USDollar. The
Chinese have had enough, and are
playing hardball. They are pursuing
another window for a breakin, as
they want redemption of USTBonds,
even old legacy bonds. The fiat
paper currencies are tethered together,
lashed as a group on a sinking
derelict ship that struggles to
find stability in stormy seas of
liqudity. Soon a day comes when
we wake up to find Gold is two
times higher in price and Silver
three times higher. The USDollar
cannot devalue by a large amount
against the Euro or British Pound
or Swiss Franc or Japanese Yen.
Such an event would rip the trade
routes apart, sending trade volume
to the ocean floor. The USD
devaluation is due versus Gold & Silver.
The event will be your best clue
that the US has
slipped into the Third
World. The next event afterwards
will be the breakup into some managed
territories, as no more federal
entity can conceivably act as mafia
syndicate leader and blood sucker
of national wealth.

## ESCAPE FROM THE USDOLLAR

◄$$$ RICKARDS EXPECTS A NEW WORLD MONETARY SYSTEM TO BE REBUILT AROUND
GOLD. THE OUTSIZED MONETARY GROWTH
(MONEY SUPPLY) OVER THE LAST DECADE
DICTATES A GOLD PRICE OF AT LEAST
$7000 PER OUNCE. THERE IS ALWAYS
SUFFICIENT GOLD TO ANCHOR CURRENCIES,
AS THE CHALLENGE IS TO SET THE
PRICE OF GOLD CORRECTLY. IN ORDER
TO RESTORE CONFIDENCE AND INTEGRITY
IN THE CURRENCY SYSTEM, THE PRICE
WILL BE MULTIPLES HIGHER. HIS VIEW
OF A ROLE BY THE INTL MONETARY
FUND IS ERRANT AND FOOLISH, BUT
HIS VIEW OF A RETURN TO THE GOLD
STANDARD AGAINST THE ELITE'S WILL
IS VERY CORRECT. $$$

Jim Rickards plays an intriguing game on both sides of the bank cartel fence.
He has been advising governments
motivated to devalue their currencies
to buy gold rather than other currencies,
a more effective approach. The
current approach is a race to debase
currencies, which will not restore
growth in their weakened economies.
It will instead produce price inflation
and further financial sector instability. He
interprets the enduring heavy flow
of gold from West to East as evidence
that the world monetary system
eventually will be rebuilt around
gold, with an emerging new standard.
He cites one of the greatest failed
experiments in economic history,
ending with a climax collapse of
the USDollar. The power of the
USFed is oversized, due to the
USDollar's unique position as the
global reserve currency. As
a result, actions by the USFed
create huge percussive ripples
across the global economies, causing
problems in foreign nation banking
systems and foreign economy price
structures, in particular the sensitive
food prices. In fact, often
the influence seen in events is
little understood by the USFed
itself. In the colorful words of
Rickards himself, the policy makers
at the USFed believe they are dialing
a thermostat up and down, when
actually they are tinkering with
a nuclear reactor. The risk is
a meltdown of the entire global
financial system in his view, fully
agreed.

The USFed has printed almost $3 trillion since 2007, in reaction to insolvency
and liquidity crises. After the
final analysis is done in a review, the
initiatives called QE1 and QE2
and QE3 will be seen as enormous
blunders in one of the greatest
failed experiments in economic
history. Such is the Rickards
view, in unison with the Jackass.
What has already collapsed is the
confidence in paper money. Next
comes the crisis climax in sovereign
debt, which serves as the defacto
foundation of the leading fiat
paper currencies. Rickards anticipates
a second major liquidity crisis
to occur in the next couple years.
When it comes, the major central
banks are going to be tempted to
print another $6 trillion to $9
trillion in his opinion. The
Jackass is in full agreement, except
a systemic breakdown will occur
first. He errantly expects the
Intl Monetary Fund to take control
and issue Special Drawing Rights
(SDR) as global currency. But such
a conceptual plan is cockeyed,
and evidence of his own compromised
career connections and roots. None
of the central banks have clean
balance sheets at this point, as
they look like discredited hedge
funds. The ends reached today are
marred by lost confidence in paper
money. It must be restored. No
solution has succeeded, since all
have been drawn from paper money,
more debt, and obscene extension
of credit. The IMF and its queer
SDR represent more of the same
lousy plan. If the IMF indeed is
asked to flood the world in a grand
reliquified process, it will create
massive inflation, the source of
which might not really be understood.
So Rickards is contradicting his
own supposed solution by citing
the harlots at the IMF as an integral
part of any viable solution.

The better alternative is the Gold solution, which would
restore confidence, claims Rickards.
But to have a non-deflationary
Price of Gold, it must be on
a reset at $7000 per ounce, possibly
as high as $9000 or 10,000 per
ounce. Rickards counters the argument of
extremism by critics. He points
out how money supplies have risen
far out of proportion to the
mining output and physical supply
of gold. Very effectively, he
concluded that analysts and finance
ministers are incorrect when
they claim a Gold Standard cannot
be instituted, because there
is not enough gold. There
is always enough gold, since
it is just a question of price.
The theoretical question of the
right Price for Gold on a return
to the Gold Standard is simple
when marking to the rise in monetary
aggregate (money supply). It
is at least $7000 per ounce.
Although likely and surely the
correct price, it is far from
a central bank desire or goal.
The Elites clearly would not
want such a high proper Price
of Gold for restoring confidence.
Rickards repeats the confidence
factor, when the more valid objective
is to restore soundness and integrity
in the currency system. In his
description of the future for
the international monetary system,
he reminds that the USFed is
still behind the wheel, but they
are still driving the bus over
the cliff. See the Peak Prosperity
interview (CLICK HERE).
Any path from the USTreasury
Bond to Gold bullion as financial
core ballast will involve a global
crisis in climax, a deadly event
sure to feature war.

◄$$$ EURO CENTRAL BANK SET UP THE SWAP LINE WITH CHINA FOR
BILATERAL TRADE. THE MANY NATIONS
IN THE EUROZONE WILL SEE THEIR
CORPORATIONS AND BANKS PARTICIPATE
MORE IN YUAN SECURITIES, MOVING
AWAY FROM USDOLLAR SECURITIES.
THE YUAN SWAP FACILITY EXPANDS
FURTHER, AS THE USDOLLAR FADES
SLOWLY AWAY AS TRADE STANDARD.
ESSENTIALLY ALL TRADE BETWEEN CHINA AND EUROPE WILL BE
NON-USDOLLAR IN BASIS. $$$

An historical break has occurred. Europe has unequivocally moved into the Chinse financial
camp.China and
the European Union have signed
a $57 billion currency swap agreement.
It will endure for three years.
Note the encroachment into the
West. Europe is the grand prize, and always has been. The US is losing Europe to the
New China Sphere. On October
10th, the Peoples Bank of China
(PBOC) signed a vitally important
currency swap agreement worth
CNY 350 billion with the Euro
Central Bank (ECB). The facility
has been established by authorities
in the context of rapidly growing
bilateral trade and investment
between the EuroZone and China,
with an added motive to ensure
the stability of financial markets. The
EuroCB is poking a finger in
the US eye socket. The swap line facility will be
available to all EuroZone countries
through their national central
banks. At the same time, the
PBOC will have access up to EUR
45 billion. The EuroCB claimed
the swap line will serve as a
backstop liquidity facility.
Trade between Europe and China has doubled since 2003 and is worth more
than $1.3 billion per day. The
European Commission is set to
negotiate on an investment agreement
with China at
a meeting in Luxembourg later
in October, which could pave
the way for a Free Trade Agreement
between the two biggest markets
in the world, Asia and Europe.
The Eurasian Trade Zone is within
reach in the near future, sure
to leave the United States outside looking
in.

Bilateral trade has grown tremendously with China,
which has pushed for wider flexibility
in the exchange rate control mechanisms.
By this deft maneuver, China is
integrating itself more into global
financial markets. China serves as the EU's second largest
trading partner after the United States. The 28-nation bloc exported
EUR 71.4 billion of goods to China in the first half of this year, with imports
totaling EUR 133.6 billion, according
to Eurostat data. Note the large
European trade deficit as a result.
The Bank of England was the first
in a race among European central
banks to establish swap facilities
with China, when it agreed
on a line of CNY 200 billion and
GBP 20 billion in June. China has similar swap facilities in place with Australia, Turkey, Brazil, South Korea, and Malaysia. It has ones with France and Switzerland in progress. The largest such swap
facilities are found in Asia.
Hong Kong has a giant swap agreement
at CNY 400 billion, followed by South Korea at CNY 360 billion.
The EuroCB line at CNY 350 billion
is their third biggest. The ECB
swap line is smaller than initially
anticipated, but is expected to
expand. The Frankfurt Main Finance,
the key lobby group, stated in
July that the facility could be
as much as CNY 800 billion. All
in time.

Frankfurt has motive. It strives to become an offshore trading center for Chinese Yuan. Germany has
forged close ties with China,
its third biggest trading partner.
The two countries imported and
exported goods & services valued
at EUR 144 billion on a bilateral
basis in year 2012. The competition
is with London,
still the global center for currency
trading. The London arrogance is evident, as some City economists called the German-Chinese
swap line announcement merely symbolic
as a backstop. Hardly!! Next will
come Chinese Govt bond issuance
out of Germany, to rival London. The swap facility when fully in place will aid economic development
in other nations such as France and Italy and Spain.
Christian Noyer is the French representative
on the ECB Governing Council. He
said, "The swap agreement
is for a very significant amount.
This reflects the strong position
of the Euro in terms of international
exchange. EuroZone banks and French
banks now have at their disposal
the security they need to develop
their business in renminbi over
the long term."

The Chinese Yuan is become more of a global currency, a key requirement for
serving as a secondary global reserve.
Holders of Yuan paper in Europe
can be more assured to avoid any
financial squeeze with amplified
access to renminbi liquidity. The
greater message is a billboard
sign that the majority of European
trade with China will
be done no longer in USDollars.
The secondary impact will be more
Yuan securities occupying the EU
banking systems, and fewer USTBonds.
Expect more EU-based diversification
out of the USGovt sovereign debt
securities. The tide is going
out on the King Dollar yacht, soon
to find itself aground. See the
Bloomberg article (CLICK HERE)
and the BRICS Post article (CLICK HERE).
The progression toward the Chinese
Yuan reaching global reserve currency
status is moving along apace. It
will soon achieve that status.
An interesting but somewhat myopic
perspective is offered by John
Mauldin, always on the scene to
provide a distorted mainstream
viewpoint, at times shallow. The
2000 decade did not witness a Muddle
Through as was his constant goofy
superficial refrain, but rather
a crisis filled set of years as
the Jackass forecasted. His essay
strays from reality. He regards
the Shale Energy programs as viable,
when it is a sham wrapped in a
Ponzi Scheme. He perceives the
US Current Account deficit as declining,
when the reduced imports are an
obvious signal of USEconomic recession
rather than health. His discussion
on currencies and Chinese trade
is excellent though. See the Investors
Insight article (CLICK HERE).

◄$$$ INDICATIONS THAT PANAMA IS WORKING TO ABANDON
THE USDOLLAR, AND REVERT TO THE
BALBOA CURRENCY. EXPECT A USDOLLAR SPLIT,
SINCE SO MUCH COLOMBIAN MONEY RESIDES
IN THE PANAMA BANKING
SYSTEM. THE PROCESS WILL BE SLOW
IN TRANSITION. THE CREATION OF
A GOLD VAULT IN THE LATIN AMERICAN
BANKING NEXUS IS VERY SIGNIFICANT.
$$$

Word came from my Central American source in Costa
Rica, good
reliable with USMilitary and
USGovt security agency background.
His information has coincided
well with The Voice on several
past stories. A Panama bank
shutdown concerned the re-introduction
of the Panama Balboa currency. The
plan is to float the Balboa again,
which for over 25 years has had
a 1:1 peg to the USD. The
story has yet to be confirmed
in clear terms. Their banking
system was disturbed this past
summer by a serious hacking incident
within their ATMachine system,
which had a single contractor
and therefore a single point
of entry to hack into. The three
days of bank shutdown ended without
incident. So far the USDollar
is still in usage for the economy
and banks. Any transition will
be very slow. Apparently, the
ATM systems are working again. The
word is that Panama wishes to possibly pursue a gold-backed
Balboa currency, or adopt the
Euro currency instead. The
bank shutdown gave them an opportunity
to rejigger many things in the
financial system. Details are
very difficult to obtain, just
firm word from the source. Panama hopes to
abandon the USDollar in their
economy and banking system. In
preparation, they are loading
up on Gold bullion in reserves,
to fortify the reverted Balboa
currency.

The USGovt has controlled abused and pushed around Panama for
years. It is the gigantic Colombian
drug money harbor in the Americas. They prefer Panama banks
to their own, and use Panama to
mix the drug money with legitimate
commercial money, to engage in
large construction and investment
projects, in order to integrate
the money into the system (launder
via projects). From Jackass personal
research and on the ground observations, one
third of Panama bank funds are
from the native canal income estimated
at $8 to $9 billion per year, which
spawned a local economy founded
in trade. That is significant
for the small nation with 2.5 million
in population. Recall that President
Theodore Roosevelt purchased the
Panama Canal Zone for a pittance
from the nation of Colombia,
the Panama region
being a province to the north.
It only later became a sovereign
nation with formal income from
the canal, taking over the trade
channel from Costa Rica and their railways
a century ago (called the land
canal). Nowadays the massive import/export
traffic has enabled a significant
distribution, outlet, and accounting
business that is truly impressive. A
second 1/3 of Panama bank funds
are from the Colombian sources
of drug money mixed with valid
commercial money. The nation
of Colombia (little
known to US folks
bombarded by propaganda) is the
site of the strongest, most vibrant,
and best financed economy in all
of Latin America, which also boasts
the strongest stock market in the Americas.
Its medical facilities in certain
respects rival the US, especially in cancer cures which are largely
obstructed by the American Medical
Assn. They focus on slower metabolic
solutions in quick cures, while
the US focuses on chemotherapy toxic solutions in
managed death. The last 1/3 of
Panama bank funds are from the
USGovt security agencies, their
pensions, their covert projects,
and more, all steeped in secrecy.
One could call Panama the off-shore slush fund home for the
USGovt dark side dominated by narcotics.

When Noriega was ousted in the 1980 decade, a deal was struck, as the Jackass
has inferred. The US and Latin
American elite agreed upon a No-Kill
Zone in Panama where drug money
from the entire American Hemisphere
could find lodging in safe haven.Panama emerged as the Switzerland of Latin America.
It is an impressive city with hundreds
of banks, from Europe, from Colombia,
from the United States, from Canada,
and from Asia.
They have 20 Colombian banks down
there, like Banesco. Most names
were not recognized upon the first
few trips for canal inspection
as a tourist. Panama differs
from Costa
Rica central
highlands in that it is much more
humid, with somewhat more insect
nuisance. More English is spoken
there than in Costa Rica. The legal profession is more honorable
there. The infrastructure is more
reliable, such as for cell phones,
cable TV, and internet service.
The agreement to use the USDollar
in commerce and banking was part
of the accord not to engage in
murder, abductions, and extortions
of key bankers and drug cartel
leaders within the Panama border. It
has stood for over 25 years, the
safe haven understood and honored.
Inquiries were made by the Jackass
in 2009 and 2010 to a couple acquaintances
made with some banking experience
about a transition away from the
USDollar in the event of further
disruption and financial disturbance.
The answer was that the government
was busy creating contingency plans.

Conclude that if the Panama Govt breaks away from the USD fold, it
will potentially disrupt a system
in place for over two decades,
and deliver a grand FU to the United
States Govt
and Military. Many Panamanian soldiers were killed when Noriega was ousted, and a national
holiday created to honor the
dead who stormed a USMilitary
Base. Some underlying hard feelings
linger. My belief is that the
USGovt agencies in Panama will continue to enjoy their safe haven
from which to do banking, even
to fund pensions and their haunting
projects. But the Colombians
might serve as a key factor to
force a USD split. Many USGovt
currency decisions and Treasury
Dept actions are designed to
isolate drug cartel competitors
to the CIA and its vast business
that has usurped the Drug Enforcement
Agency (cartel cops) and the
Coast Guard (cartel escorts).
Any attempt to Call Home Dollars
for conversion will backfire.
Any pressure exerted on Colombia
Dollars will result in a grand
resistance. The Jackass belief
is that the upcoming USDollar
split into a foreign USD (preserved)
and a new domestic USD (devalued)
will have a Colombia dynamic
resistance force involved. Billion$
of Colombia funds
held in Panama banks
will not want to go Panama Balboa
unless it is formally gold-backed.
It will remain in USD form, but
seek regulatory authorities outside
the USGovt purview. But the
USGovt will continue to make
and apply rules, as usual, in
a highly bothersome manner. The
USD split comes.

Here is the actual note from the strong USMil/USGovt source. On or about September
26th, he wrote, "The reason
for the 72-hour delay apparently
lies in the fact that Panama has for several decades been using the
USD as its currency in place of
its old currency, the Panamanian
Balboa. I received a message from
within the IMF that Panama had been in the process of preparing
to restore the Balboa and dump
the USD as its currency of trade.
In order to accomplish that, Panama has been acquiring gold in order to provide
asset backing. Additionally,
they had never installed the Babylon II software within their banking system.
On Friday, all banking institutions
in Panama shut down for a four-day period in order
to complete the changeover of software.
That four-day period ends on Monday
night at midnight [Sept 30th],
and Panama will
be Basel
III compliant in preparation for
the Global Currency Reset." The
key points are that hidden developments
are at work of significance to
alter an important USD zone. The Babylon
software conversion is an important
upgrade to the system. The Basel
III compliance is required to bring Panama into
the stable position. The Stage
#3 gold vault indicates a serious
maturity in Panama not
seen before. Big things are happening
in Panama not visible.

Not content with just one report on Panama activities,
the Jackass called upon a personal
friend made in Panama,
an American with over ten years
of experience sauntering around Central America, Colombia,
and other Andes
nations. He is a reliable bright
fellow with many local connections,
like with Latino friends and a
few men who work in their banking
system, as well as a few attorneys.
Since the November 2010 ruse about
a tax sharing pact with the USGovt,
the legal profession has suffered
a 50% business cutback. It was
a ruse, since promulgated by the
USDept Treasury, but never even
put to vote in the Panama Assembly
for ratification. It served a purpose
in scattering the gringos and wrecking
the off-shore business, the likely
motive from the start. This friend
Marky offered information gathered
on his own. He pointed out early
on that Panama has no central bank per se, not in the
usual sense. When news wire stories
began, they referred to a bank
shutdown by Banco Nacional de Panama.
But it is merely a bank, to be
sure a prominent bank whose example
is followed by other banks. It
is not the central bank. The gold
backing evidence is being slowly
verified. Secure facilities are
being put in place.

The biggest item reported by Marky was the depository being created. But bear
in mind it is a private facility
designed to accommodate wealthy
Europeans who no longer trust either
Switzerland or London, as he mentioned
directly to me in a message. The
facility does bode well for rhyming
with what the USM/USG source said.
Mark wrote, "I know some
German and Swiss guys that are
involved in setting up a Stage
3 type depository for gold at the
old Air Force Base. I do not know
if it is active yet, but it jibes
with Panama trying to back Balboas
with gold. I know that at least
one major bank here has accounts
in other currencies, Euro for sure
and Chinese Yuan too. Just to clarify,
that facility was spearheaded by
a German guy and a Swiss guy (not
necessarily the Germans and the
Swiss as an organized entity) originally
for private accounts. They are
trying to make it a international
storage facility (such as Hong
Kong) for international precious
metals owners that no longer trust Europe
(Swiss vaults with Allocated Accounts)
or other facilities. It probably
would qualify for the local government
as well, but I can imagine they
might use their banking network
for such matters.

I
suspect that Martinelli would
have to adopt another [existing]
common currency or start a new
one. If he did, it would definitely
have to be gold backed. Otherwise
the currency speculators would
tear it apart like they did with
the Mexican Peso years ago. Plus,
imagine trying to exchange Balboas
when traveling abroad to Asia.
It is probably like trying to
exchange Colombian Pesos in Bangkok! Expect people to divide their accounts into local currency,
and another very common currency
like USD or Euro to be accepted
when conducting business or travel
worldwide. The bankers are very
conservative in Panama.
That is probably what saved them
from investing in the US housing mess, the mortgage
bond bubble, and the derivatives
scam."

Marky went on to mention a friend who is actively investigating the events.
So updates might be provided. He
described President Martinelli
as unlikely to adopt another flawed
fiat currency unless it had a more
secure backing like with gold. Apparently,
over the last two years several
prominent Expat Americans in Panama have expressed concern
about being tied to the USDollar. Martinelli
is a bit of a business bully, which
is often necessary in dealing with
corrupt Latin politicians. His
wealth is from owning all the Super99
grocery stores and Dollar Stores,
but he is a self-made man. I suspect
he has been given stern advice
from many of the Banking Council.
Many of the banks are related by
families. Panama is growing in population as young people
are moving from Spain.
They are also going to Colombia according
to several locals in Medellin
that he knows personally from travel
and long visits. Any adoption of
the Euro currency would accommodate
the new financial refugees as well. Panama is also growing in
Brazilians, some Argentineans,
and of course, still Venezuelans.

Panama announced a 5-day bank holiday.
Threat of imminent bail-in seemed
clear or possible. That was the
headline. But again, it was the
individual prominent bank, and
not a central bank. The debit cards
system was taken offline. No wire
transfers between banks and internationally
were possible until the beginning
of October. The system-wide shutdown
had important implications. No
warning was given to clients by
the Banco Nacional de Panama. The
people did not have access to ATMs
either. The shutdown was timed
over the weekend when payday came
for people across Panama.
The big question was for a Cyprus-style
bail-in on private account confiscation,
but none occurred. See the Silver
Doctors article (CLICK HERE).
It turned out that Banco Nacional
de Panama reopened without incident.
See the Silver Doctors article
(CLICK HERE).

Recall that in October 2012, one year ago, President Ricardo Martinelli said, "In Panama the
currency in free circulation
is the American Dollar and I
told the chancellor we are looking
for ways for the Euro to become
another currency of legal circulation
and to be accepted in the Panamanian
market." The goal would
be to rework Panama to
become a hub for Euro transactions
within Latin
America. But it would be a complicated
transition to abide by two standards,
especially if FATCA is indeed
installed, serving two masters.
The words by Martinelli were
spoken at a joint news conference
with German Chancellor Merkel
in Berlin. His desired plan was based on full confidence
in the German and European economies,
which he expected would overcome
the EuroZone debt crisis. But
Merkel cautioned that as head
of the currency bloc's largest
economy, Europe
needed to persevere with tough
austerity measures and move towards
closer banking, fiscal, and political
union in order to secure the
Euro's future. Martinelli has
one year left in his term. See
the Reuters article from 2012
(CLICK HERE).

◄$$$ SEVERAL NATIONS USE THE USDOLLAR WITHIN THEIR SYSTEM. SEVERAL NATIONS
HAVE A NATIVE CURRENCY PEGGED TO
THE USDOLLAR. CHANGES WILL COME
TO BOTH SITUATIONS. $$$

The Panama system uses the USDollar formally, with
a 1:1 Balboa peg the factor. The
Hong Kong Dollar is maintained
at a 7.74-7.77 peg, and has been
in effect for years. The Chinese
Yuan used to be pegged to the USDollar
until July 2005. It now floats,
but on a tight band to manage its
rise very slowly, more like extremely
slowly. The Ecuador system uses
the USDollar formally also. Times
are fast changing. These nations
have plans put in place to manage
a transition, or to manage a sudden
crisis. Given the ongoing global
financial crisis with no solution
even pursued, nations are ready
to take action. Two two key events
to watch for are Panama shedding the USD and Hong
Kong removing the USD peg. These
are two large global banking centers.
The impact on the USD prestige
will be severe. The bell will be
rung to move to Gold.

## BANKS AT WAR INTERNALLY

◄$$$ INTERNAL BANKER STRUGGLES ARE AT FEVER PITCH. THEY MIGHT SOON ATTACK
THEMSELVES, AS THEY POSTURE FOR
THE END GAME, MUCH WORSE THAN IN
2008. THEY WILL ATTACK EACH OTHER
IN THE OPEN TO SURVIVE. THE RECORD
MUST BE SET STRAIGHT. AIG WAS NATIONALIZED
AND THE TARP FUND WAS CREATED AS
A DIRECT BAILOUT OF GOLDMAN SACHS,
WHICH WAS AT DEATH'S DOOR. THE
NEXT STAGE COULD PIT THE GOLDMAN
SACHS CONTROL ARM AGAINST THE ESTABLISHED
JPMORGAN FORTRESS.

THE SHARKS ARE ATTACKING OTHER SHARKS, WITH SURVIVAL AT STAKE AND DIFFERENT
FACTIONS AT ODDS. THE ALL POWERFUL
GOLDMAN SACHS IS IN THE CROSSHAIRS
OF SEVERAL POWERFUL BANKS, WHICH
SEEK VENGEANCE. GSAX IS NOT WELL
POSITIONED FOR A FULLY ENFORCED
REGULATED BANKING WORLD. GSAX IS
BLAMED AND HATED FOR THE 2008 BREAKDOWN
AND BUSTS. $$$

The following comes from a Hat Trick Letter subscriber with former deep association
with Wall Street itself immediately
before the Lehman kill job, where
the Fannie Mae and AIG assumptions
were arranged neatly. It was not
a systemic passive event that just
happened. The 2008 events were
late in planning to preserve the
powerful titans, and to conceal
the profound fraud, as well as
to sustain the controversial derivatives
that serve as an ethereal foundation
to the US banking system. Put
aside all the silly stories in
explanation of mortgage bond weakness
and Lehman falling. The entire
cast of Wall Street banks were
vulnerable, but Goldman Sachs was
in the most control to direct events.
The battle between GSax and JPM
will resume. The following is an
account from the client, his words,
my edits for prose. He worked at
Morgan Stanley from 1997 to 2000,
and keep abreast of events from
his London
banker office afterwards in the
fixed income division. As preface,
a historical note. Back over 70
years ago, Goldman Sachs was formed
because of an Old Boy Network among
the Wall Street bankers. They did
not permit officers of rank to
come from a certain ethnic group
from the Moses, Abraham, and David
bloodline. So GSax was formed,
loaded almost exclusively by the
most talented men (later women)
from the chosen breed. When the
Clinton Admin came into power,
the President chose Robert Rubin
as his Treasury Secretary in a
bold move that made history. Rubin
was from the London Gold Office
at GSax, with tremendous reputation
and experience. Goldman Sachs moved
from the black sheep to the primary
wolf in the food chain, a completed
full circle. They proceeded to
lead in the pilferage of the entire Fort Knox
gold reserve for Wall Street benefit,
using Papa Bush connections on
the logistic side with his ample
CIA facilities.

Fast forward to today. Goldman Sachs is out to weaken the banking cabal so
that in the end game, they can
grab either Bank of America (BAC)
or JPMorgan itself. What a great
story the merger of GSax and JPM
would be, not likely since enormous
egos are involved, to pit Basel against the elite Goldman crew. Wells Fargo
is simply too strong and Citigroup
is a global giant, neither available
for acquisition. Back in the
mid-2000 decade, Hank Paulson was
the figure who weakened BAC by
forcing Merrill Lynch and Countrywide
down their throats. They will
not recover. In the meantime, JPM
was forced to swallow Bear Stearns
and Washington Mutual, also a difficult
digestion. Although weakened, JPM
was so large and so powerful, that
they continue today. However, JPM
is burdened by the Interest Rate
Derivatives, which are a major
drag on their true assets. This
banker source believes that JPM
tried to force Lehman down GSax's
throat, a maneuver that backfired
for everyone and led to the grand
bust. In the end, the bank
syndicate rescued Goldman Sachs,
done under the USFed's direction
when AIG went down. A giant 100%
redemption was handed to GSax on
CDS default insurance that caused
great controversy, since no other
firm was given such a sweet insurance
payout. The USCongress frequently
argues over the deal.

This civil war among the big banks broke out when each investment bank became
keenly aware that they had played
the last card with the subprime
mortgage bonds, loaded with leveraged
securities behind them, as the
housing bubble broke from its own
weight. It exhausted the last buyers,
drawing for two years upon unqualified
buyers. In essence, JPM forced
Lehman onto GSax but the venerable
criminal GSax refused to swallow
the bond giant. This is his hunch,
hard to prove categorically. Immediately,
Lehman collapsed with a JPM hand
involved in a cutoff of cleared
funds from bond sales. It was
brutal. Then in the domino chain,
AIG collapsed, which meant actually
that GSax collapsed. The nationalization
of AIG by the USGovt was done to
prevent publicity of the bankruptcy
of GSax itself, amazingly. The
entire TARP Fund was a disguised
bailout of GSax. It was Hank
Paulson who made the phony appeal,
laden with lies, to aid his old
firm, for which he still had loyalty.
Paulson fell on his knees for a
reason.

Goldman Sachs in the end game needs to acquire a bank,
to morph into a commercial bank
in structure, and to make usage
of additional assets like a true
vampire squid. Otherwise they are dead. The events
will surely be interesting, since
very likely GSax will be unable
to pull off the switch. Wells
Fargo is too strong, and kept
at arm's length from the New
York power center. Citigroup
is too global and geopolitically
not possible, since it has deep
roots in Europe and Panama with CIA drug money.
This leaves Bank of America and
JPMorguen. When BAC was forced
to acquire Merrill Lynch and
Countrywide, it was to weaken
them with a huge portfolio of
wrecked impaired mortgage assets. Under
the grand maestro direction by
Paulson, the giant JPMorguen
was bullied. In the end, during
the dizzy sequence of events, JPM
caved in and acquired Bear Stearns,
thus taking over the silver short
portfolio, and also acquired Washington Mutual with its massive mortgage portfolio holes. When
GSax refused to swallow Lehman
Brothers, the entire situation
blew up. If GSax had accepted
the Lehman wrecked portfolio,
the Wall Street titans might
have bought some time, but GSax
might have died instead of just
Lehman. It all blew up in everyone's
face, and the public had to be
told a credible story. The public
had to accept the TARP Fund hidden
bailout of Goldman Sachs itself. The
hidden key factor in all the
sequence was that it was quite
clear with the collapse of AIG,
that GSax was going to suffer
a failure. This was the case
since AIG underwrote the insurance
contracts, the Credit Default
Swaps owned by GSax. If AIG went
down and died, then GSax would
have gone down and died immediately
afterwards as consequence. So
AIG had to be bailed out, and
the best way to do so was to
nationalize it. By putting it
under the USGovt roof, the bankers
could keep it all quiet, limit
the snooping noses and probing
eyes of analysts and investigators.
The public would not learn that
the entire US banking
system was insolvent and kaput.

To the present. Jamie Dimon (CEO of JPMorgan) probably stands in the way to
obstruct any breakup of the big
banks. A big publicly cheered
breakup would enable Goldman Sachs
to grab a few pieces and establish
themselves as a banking entity,
their longstanding goal. They
want respect, although they command
awesome control. If Glass-Steagall
is re-instituted in a different
form (like as the Dodd-Frank Financial
Regulatory Bill) then GSax is actually
doomed to die. This is because
GSax has no depositor base and
nobody will bail them out. They
cannot even benefit from a sensational
bail-in confiscation of private
accounts, since none to seize. Therefore,
it could be that GSax wants Jamie
Dimon out of the corner office
for their own survival in order
to grab a banking franchise. This
is astounding, since GSax might
sabotage JPM in the end, like with
derivatives or gold shorts, even
silver shorts. Another reason persists.
Dimon is arrogant and widely hated.
He has rubbed more than a few people
the wrong way. Dimon is widely
reported to chase the wives of
fellow executives, and to catch
them for numerous dalliances. If
justice prevails, Dimon will be
sacked for the USTreasury breakdown
and the derivative bubble in the
process of breaking. This is sensational
talk.

Contrary to what most people believe, the collapse of the derivative mountain
is a fait accompli, not preventable,
already in progress, well along. Nothing
that GSax or JPM do can stop the
derivative bust from unfolding
in unbelievably gory detail. The
USTBond asset bubble is breaking
down, which makes certain the derivative
bust since founded on more leverage
and laden with more instability. Neither
titan will go bust themselves,
because Gold will be revalued higher
so as to recapitalize the banks.
After this move, a major transition
will occur. The nation will make
a healthy transition to traditional
banking. However, Goldman Sachs
will not have a business model. We
are definitely in the end game
and GSax is in absolute and utter
survival mode. The source's best
educated guess is that Jamie Dimon
of JPMorgan wins and Goldman Sachs
dies. JPM is the USFed's operating
arm, a powerful syndicate center.
The GSax machine has made too many
systemic enemies, while Dimon has
made a great many personal enemies.
This civil war broke out in 2008
when everyone knew that the jig
was up on the great housing and
mortgage finance bubbles. The bust
followed, but the denouement has
not been written. There is great
resentment within Wall Street and
elsewhere, since GSax broke ranks
and started the collapse for its
own survival. Now many powerful
entities went to wreck Goldman
Sachs, which has grown too arrogant,
and taken control too fast, after
not being part of the Old Boy Network.
Maybe some animosity persists since
GSax stole more of the Fort Knox gold than
any other firm. The battle will
be full of intrigue, and very sparse
on information.

◄$$$ BANKING AS ORGANIZED CRIME, PROTECTED BY THE USGOVT, RUN BY THE
USDEPT TREASURY, ENFORCED BY THE
REGULATORS, WITH FBI AS HITMEN.
BUT IT IS COMING UNRAVELED QUICKLY.
THE BIG BANKERS ARE NOT AFRAID
TO BE SCENE IN FULL DAYLIGHT DOING
CRIMINAL DEEDS. $$$

In a new edition toward exposure of organized banker crime, Canadian financial
analyst Rob Kirby and German financial
journalist Lars Schall discussed
the recent dismissal by the US
Commodity Futures Trading Commission
of complaints about manipulation
of the Silver market. In particular,
Kirby and Schall focus on a powerful
entity that is rarely mentioned
in financial mainstream journalism,
if at all. It is the Exchange Stabilization
Fund. The Jackass has described
its function several times, including
in this issue in a previous chapter.
It is the most important control
fund in the world. See the Lars
Schall interview (CLICK HERE).

◄$$$ FOUR BIG INTERNATIONAL BANKS OWN BOTH THE AUSTRALIAN BIG BANKS AND
THE BIGGEST AUSTRALIAN MINING FIRMS.
THEY ARE IN CONTROL FOR THE FINANCIAL
ADJUSTMENTS AND RESET. THE STORY
IS TYPICAL OF THE WESTERN FINANCIAL
SUPER-STRUCTURES. IN THE WEST,
BARCLAYS IS THE BANKER'S BANK THAT
OWNS A SIGNIFICANT PORTION OF ALMOST
EVERY IMPORTANT LARGE WESTERN BANK.
$$$

From an Australian perspective. Australia has four large
banks. They are Australia & New
Zealand Banking Group (ANZ), National
Australia Bank (NAB), Westpac,
and Commonwealth Bank. Like many
citizens in industrialized nations,
Australians believe that their
investments in these banks are
protected by the government. Such
is not the case, since inadequate
funds protect investor deposits.
Australian colleague LouP took
a closer look at the integrated
ownership of these banks, a vast
incestuous network. The banking
system in Australia is
controlled by HSBC, JPMorgan, NAB,
and Citigroup. Average Australians
have no idea who owns their banks.
The tree below displays the ownership
of the largest banks in Australia.
In parallel, Americans, British,
and Europeans have no idea that
Barclays owns a piece of almost
every large Western bank. The companies
in the upper echelon are the top
four shareholders for all the banks
in the following level.

Next, consider the largest gold producer in Australia, Newcrest Mining Ltd.
Once more the same group of elite
banks appear as prominent. The
four financial firms which own Australia's banks also have
substantial holdings in this large
gold producing company. A simple
Google search on the 20 top shareholders
at HSBC produced a list of companies
which had HSBC within their top
20 shareholders. The same shareholder
examination for National Australia
Bank, JPMorgan, and Citicorp found
that the these four companies not
only control a vast array of mining
and industrial companies, but also
pull the strings as banks under
a different name. They therefore
are in a position to withhold at
key junctures the funding for the
development of new gold mines and
their extensions. Think coordinated
gold price interventions, together
with halted project funds for gold
mine expansion projects. The conglomerate
of big banks might have a greater
priority to command and control
the vast remaining reserves in
the ground, more than to see the
gold price achieve a higher level.
The conclusion might be that when
it suits them, the gold price will
rise and their gold reserves will
increase in value by multiples
of the current value. What a dangerous
situation when big banks control
other big banks, control major
gold producers, and control the
funding for development of hard
asset resources. Special thanks
to colleague LouP Down Under.

◄$$$ JPMORGAN AND WELLS FARGO DISPLAY THE INSOLVENT US-BANK SYNDROME
THAT WILL NOT GO AWAY. SIZEABLE
LOSSES WERE ANNOUNCED. THE 2008
ERA MORTGAGE LOSSES HAUNT THE BIG
US-BANKS STILL. THE NEXT ROUND
OF INTEREST RATE DERIVATIVE LOSSES
SHOULD BURY THE BEHEMOTH CRIME
CENTERS. THE SIGNAL WILL BE THE
RAMP-UP OF USFED BOND MONETIZATION,
THE QE VOLUME UPSURGE. $$$

JPMorguen is teetering. They go to great lengths to hide the ugly harsh truth,
that they are holding assets bearing
no value. The headlines dominate
mention of heavy ligitation costs,
but they obscure the reality of
insolvency and wrecked portfolio.
The process will continue for more
legal costs and more exposure of
the worthless assets. JPMorgan
has spent $8 billion on litigation
and set aside $20 billion toward
legal and regulatory costs since
January 2010. Those expenses will
remain elevated for the next year
or two, admitted CEO Dimon. The
firm faces an investigation of
its hiring practices in Asia,
and a criminal inquiry into its
energy trading business. A new
investigation opens every month
on their criminal enterprise. The
official posted loss was $380 million,
compared to a $5.71 billion profit
in Q3 a year ago. Mortgage fees
and related revenue plunged 65%
to $839 million, compared with
$2.38 billion a year earlier. The
net interest margin, which measures
the profit margin on lending, narrowed
to 2.18% from 2.43% a year earlier
and 2.2% in 2Q2013. It continues
down.

A major blemish was seen in the decline in the average
VaR (Value at Risk) from $122
in 3Q2012 to just $45 this quarter.
Bottom line is rapidly shrinking
assets and no economic earnings
extant. What
one sees is financial management
of earnings. The core business
of lending is slowing on the
retail and commercial side, while
the trading business is suffering
from volatility and lack of volume. In
the hidden cracks are massive
derivative losses, which will
bring onto the horizon more London
Whale sightings and outsized
losses. The Wall Street mavens
and talking toots used to love
praising the always steady breeze
of JPMorguen earnings. No more,
just the pungent odor of a financial
morgue! It was the first quarterly
loss since 2004 under CEO William
Harrison. Get ready for more
JPM losses, especially if they
are forced to show derivative
losses. See the Zero Hedge article
(CLICK HERE)
and the Bloomberg article (CLICK HERE).

The Wells Fargo story was different, but it rhymes. It would be erroneous to
say WFC posted a loss. It is deceptive
to report a $5.6 billion quarterly
gain. Their quarterly statement
was replete with balance sheet
juggling. The big sore thumb
sticking out was the $900 million
release from Loan Loss Reserves,
at a time when they urgently need
to rebuild such reserves. The
mortgage losses are not finished.
The dumping of REO homes from foreclosures
have still more losses from sale
in store. The lawsuits and litigation
costs will show more losses. Yet
they took a whopping slice from
reserves in order to boost earnings
and maintain trend. Wells Fargo
is the most leveraged of the big
banks in terms of exposure to housing. The
other shocker was the continued
decline in Net Interest Margins
(NIM), which persist despite rising
rates. Normal conditions would
show that rising rates signal a
stronger economy leading to rising
net interest margins. In 3Q2012
the NIM was 3.66%. The NIM remains
in decline, at 3.38% for 3Q2013.
The USEconomy is addicted to lower
rates. Higher rates actually set
off nasty delinquencies and lower
demand for loans. See the Zero
Hedge article (CLICK HERE).
With the big US banks
struggling, everything is on schedule
for QE to ramp higher by the onset
of 2014, if not earlier. The big US banks are in trouble, still under distress.

◄$$$ JPMORGAN’S LEGAL HURDLES ARE EXPECTED TO MULTIPLY. THE WASHINGTON
MUTUAL BALL & CHAIN WILL NOT
GO AWAY. THE PROBLEMS INCLUDE MORTGAGE
BOND SECURITIES ALSO. SUDDENLY
THE COST OF DOING CRIMINAL BUSINESS
IS RISING. A $20 BILLION GROUP
SETTLEMENT IS BEING FLOATED, ENOUGH
TO SHOCK THE JPMORGUEN LEGAL BEAGLES
(MAFIA CONSILIERI). $$$

The nation's largest bank is JPMorguen, a sprawling bank created in a long
string of bank mergers over two
decades to form a giant, too big
to manage. It braces for a lawsuit
from federal prosecutors in California.
The allegation is shoddy mortgage
securities sold to investors without
proper representation during the
boom year leading to the financial
crisis. Notice the nice sounding
terms for packing toxic and fraud-strewn
mortgage bonds to the unsuspecting.
The high profile case could foreshadow
other actions in a never ending
legal nightmare, many of whose
cases have been cited in the Hat
Trick Letter. On the other coast,
federal prosecutors in Philadelphia are reported to be investigating JPMorgan's sale of mortgage
securities. Crime has been a regular
cost of doing business, but the
tag might be multiplying.

The bank seeks class action settlements, of course with no guilt admitted.
The scope of criminal activity
is mindboggling and fear reaching. Apparently,
JPMorgan and the USDept of Housing & Urban
Devmt revealed the possibility
of striking a broad settlement
to conclude many of the looming
mortgage investigations from federal
authorities and state attorneys
general. In fairness to JPMorguen,
the acquisition of mortgage giant
Washington Mutual (WaMu) has dragged
them down. The assumption of the
WaMu legal liabilities should have
been managed in 2009, except for
the confusion of the numerous game
saving acquisitions conducted by
Wall Street. However, not so fast,
as they say!! HUD has divulged
a price tag in the neighborhood
of $20 billion for the settlement.
The series of individual cases
could easily amount to many $billions
more since $trillions are involved
in fraudulent mortgage bond underwriting.
They were assembled with multiple
income streams, juggled MERS property
titles, horrendous subprime loans
not identified, unverified income
on underwriting, mis-appraised
properties, counterfeit bonds,
and far more violations. The legal
settlements could sway the public
opinion far more out of favor for
the big banks, who have been unswerving
beneficiaries of USGovt bailout
largesse. Let it be known that
the mafia consilieri at JPMorgan
counsel were stunned by the size
of the proposed penalty. They had
expected to pay a fraction of the
$20 billion sum. If agreed upon,
a major hallmark story for the
decade in criminal settlements
would be forged. See the New York
Times Dealbook article (CLICK HERE).

◄$$$ WALL STREET HAS FOUND A WAY TO ATTACH A VAMPIRE SQUID TUBE ON STATE PENSION FUNDS. THEY
ARRANGE FOR HEDGE FUND MANAGEMENT,
THEN LOCK IN ANNUAL FEES, PAID
BY STATES ALREADY ON THE BRINK.
$$$

Matt Taibbi is irrepressible and valiant. He has pointed out the flaws of enlisting
Wall Street to help manage public
employee pension funds at the state
level. The end result is a repackaged
fund that pays out huge fees to New York based hedge funds. The Rhode Island test case was applauded by President Obama and the mole
Rahm Emanuel, who infests Chicago
currently. The hedge fund solution
was a scam. In the final wash,
a ripe $1 billion in fees was paid
to the hedge funds for their expert
management of Rhode Island state employee pensions, equal to
14% of the fund. So the states
that follow this wondrous model
can expect to add to the taxpayer
burden, not secure the future financial
security of its state workers.
The solution promoted by Gina Raimondo
in Rhode
Island had a tool kit to serve
as a model.

The Rhodes Scholar allowed her state to be used as a test case for the rest
of the country, promoted by powerful
financiers with a national view,
who wanted to push pension reform
down the throats of taxpayers and
public workers from coast to coast.
The chief beneficiaries among the
hedge funds in New
York were Dan Loeb's Third Point
Capital ($66 million in fees),
Ken Garschina's Mason Capital ($64
million in fees), and Paul Singer's
Elliott Mgmt ($70 million in fees).
The funds stand as a group to be
paid tens of $million in fees every
single year by the already overburdened
taxpayers of her ostensibly flat-broke Ocean State. The gangsters Loeb, Garschina,
and Singer happen to serve on the
board of the Manhattan Institute,
a prominent conservative think
tank with a history of supporting
benefit-slashing reforms that slash
benefits. So the movement is for
higher fees but lower benefits,
typical of the Wall Street tradition.
The institute named Raimondo its "Urban
Innovator" for 2011, in
Satan's service. See the Rolling
Stone article by Taibbi (CLICK HERE).

◄$$$ HUNGARY HAS BOOTED THE ROTHSCHILDS
OUT OF THEIR COUNTRY. THE NATION
PLANS TO ISSUE DEBT-FREE MONEY.
$$$

Hungary has turned a new page in modern
history. Not since the 1930s Germany has a major European
country dared to escape from the
clutches of the international banking
cartels controlled by the Rothschild
family. The challenge is waged
against financial tyranny. Back
in 2011, Hungarian Prime Minister
Viktor Orban promised to dole out
justice on the deeds of his socialist
predecessors, who submitted the
nation to debt slavery under the
rein of the Intl Monetary Fund.
Curiously those earlier administrations
were riddled with Israelis in high
places. Orban has now moved to
remove the usurers from their exalted
posts. The rugged prime minister
told the IMF that Hungary neither
wants nor needs further assistance
from the proxy operating with ties
to the US Federal Reserve Bank.
The unaccountable central bankers
are cut off. In a bold step,
the Hungarian Govt has assumed
sovereignty over its own currency.
It now issues money no longer linked
to debt. The results have been
nothing short of remarkable. Their
economy is no longer beset by debt
service. See the Dark Moon Daily
article (CLICK HERE).
Be on the watch for cartel vengeance.

◄$$$ VATICAN BANK PLANS TO CLOSE ALL EMBASSY ACCOUNTS AND OTHER DIRTY
MONEY ACCOUNTS. THE GLOBAL OFF-SHORE PARADISE IS SHUTTING ITS DOORS. THE LONG SKEIN OF VATICAN CONTROVERSIES IS BEING DEALT WITH IN A SANITATION PROJECT.
AT RISK ARE BIG USGOVT OFFICIAL
ACCOUNTS FROM STOLEN FUNDS. $$$

Some high level hand is directing the Vatican to
clean up its act, to shut down
the many avenues for illicit funds
to seek a safe haven as concealed
accounts. My source indicates it
is the White Dragon Family directing
the reform pressure. The Vatican
Bank is the object of scrutiny
and reform. Its officials suspect
tainted money occupies many accounts. More
than 1000 customers who have no
business holding accounts at the
Vatican Bank must remove their
funds and leave town. They have
located more than 300 million Euros
at the once secure bank, money
the institution's officials suspect
is illicit. They are calling
for the funds to be removed, to
go home even if under scrutiny.
The church state (a sovereign nation
technically) has sought the aid
of a consulting firm as part of
a change in strategy, where it
moves away from secrecy, toward
more transparency, seeking more
integrity. The embattled Vatican has
been troubled by bank affairs ever
since the Commission for Works
of Charity was established in 1887
(its actual formal original sin
name).

An ongoing battle has been waged with the Italian Govt, which constantly works
to seize the protected church assets
in legal expropriation maneuvers.
Over the decades, this financial
institution, which was later rechristened
as the Institute for Religious
Works (IOR), has been accused of
deep involvement in Sicilian mafia
money laundering, stock market
manipulation, and illegal transactions
worth $billions channeled through
the bank vestibules. It also played
a key role in the 1982 collapse
of Milan's Banco Ambrosiano, the largest bank crash
in Italian history. In the 1990
decade, Italian industrialists
used the IOR spin-off to launder
huge bribes for politicians. More
recent controversy centered on
CEO Ettore Gotti Tedeschi over
a vast money laundering investigation
in May 2012. See the Zero Hedge
article (CLICK HERE).

Keep in mind that three types of funds dominate in Vatican Bank accounts. They
are mafia money, narcotics money,
and money stolen, often by the
USGovt officials. The various embassies
are neck deep in money laundering
of narco funds. Obama, Hillary,
Geithner, Paulson, and other figures
have secret bank accounts valued
in the $billions at the Vatican, placed from stolen
Funds like the Falcone account.
The methods are from a common theme.
Big transfers are held up, lawyers
enter the fray, the parties murdered,
and funds stolen, then secured
in the Vatican. An unsual source of information has
told the Jackass many stories,
with the USDept Treasury hiring
the hitmen to remove both claimants
and their attorneys, of course
to keep America strong and to defend
liberty. That officials fill their
pockets is a mere side effect of
the preserved national security.

◄$$$ CYPRUS-STYLE WEALTH CONFISCATION IS NOW STARTING TO HAPPEN ALL OVER
THE GLOBE, WITH A ROOT LOCATION
IN EUROPE. POLAND SNATCHED PRIVATE PENSION FUNDS IN ORDER
TO REDUCE ITS SOVEREIGN DEBT. ICELAND IS BACK-TRACKING ON PAST PROMISES OF
ACCOUNT PROTECTION. BOTH NEW
ZEALAND AND CANADA ARE
MAKING PROGRESS ON THE SAME PATH
TO CONFISCATE PRIVATE ACCOUNTS.
THE MODEL HAS BEEN ADOPTED BY THE
EUROPEAN COMMISSION, ALONG THE CYPRUS LINES. $$$

The Bail-in confiscation of private accounts and funds is gathering momentum,
becoming an accepted practice all
across the world. No bank account
or pension fund is safe, as a result
of profound systemic insolvency.
The Cyprus-style wealth confiscation
model is spreading in several nations
like a cancer. Europe
has written the template. The European
finance ministers have agreed on
a plan that would make Bail-ins
the standard procedure for rescuing
large broken banks in the future.
CNN reported, "European
Union finance ministers approved a
plan for dealing with future bank
bailouts, forcing bondholders and
shareholders to take the hit for
bank rescues ahead of taxpayers.
The new framework requires bondholders,
shareholders, and large depositors
with over 100,000 Euros to be first
to suffer losses when banks fail.
Depositors with less than 100,000
Euros will be protected. Taxpayer
funds would be used only as a last
resort." The precedent
that was set in Cyprus is being used as a template for establishing
bail-in procedures in Poland, Iceland, New Zealand, and Canada,
fanning out soon to strike the United
States as
well. From now on, anyone who keeps
a large amount of money in any
single bank account or retirement
fund is acting very foolishly.
For overview, see the Economic
Collapse article (CLICK HERE)
and the Silver Doctors article
(CLICK HERE).

In Poland, private pension funds were raided in
order to reduce the size of the
government debt. The Polish Govt announced it will
transfer to the state many of
the assets held by private pension
funds, slashing public debt.
In the process, it put in doubt
the future of funds worth in
the billions of Euros, many of
them foreign owned. They make
it seem like a complicated legal
maneuver, but they simply stole
private assets in a unilateral
decision without reimbursement
in any form. A legal challenge
is forthcoming, since the pension
funds have called the maneuver
unconstitutional. Nothing was
offered in compensation. The
confiscation was limited to private
funds within the state guaranteed
system, the transfers made to
a state pension vehicle. Private
stock assets would not be taken.
Prime Minister Donald Tusk promised
to confiscate the remainder of
pension holdings, to be placed
in the state vehicle over the
next 10 years before savers hit
retirement age. The black hole
of the state has drawn funds
to vanish.

In Iceland, the previous blanket guarantee for bank
accounts is about to be reduced
to EUR 100,000. Past applause has been over breaking
the banks down in liquidation,
even some legal attacks during
the last financial crisis. The
question has arisen whether the
door has been opened for haircuts
applied on larger accounts. The
Emergency Act was reafrmed twice
since the crisis that hit the
remote island nation in October
2008. The Icelandic Govt at that
time declared all deposits in
domestic financial institutions
were guaranteed. The changes
came with coincidental timing
to the current stalled talks
between domestic bank creditors
and the government over haircuts
and lifting capital controls.
Banks have restricted the outflow
of funds at around $8 billion.

In New Zealand, the implementation of a Bail-in
system to deal with any future
major bank failures has been
discussed. A Cyprus-style solution to bank failure is being promoted, the design being
for small depositors to lose
some of their savings in funding
big bank bailouts. Such is the
claim of the Green Party on watch.
The formal name is given as the
Open Bank Resolution (OBR) led
by Finance Minister Bill English
as the favored option. If a bank
fails under OBR, all depositors
will have their savings reduced
overnight to fund the bank bail
out. The formula is simple, whereby
depositors would have their savings
shaved overnight by the amount
needed to keep the bank in a
solvent condition.

In Canada, they are moving toward adopting the same
Bail-ins to handle bank failures. The policy has become part of the
new official Canadian Govt budget
process. Within the "Economic
Action Plan 2013" submitted
to the House of Commons, the
formal rules have been proposed
to implement a Bail-in regime
for systemically important banks
in Canada. The plan was likely being hatched long
before the crisis in Cyprus ever
erupted.

◄$$$ ITALY’S OLDEST BANK MONTE
PASCHI HAS COMPLETED A BAIL-IN
OF BONDHOLDER ASSETS TO THE TUNE
OF $650 MILLION. IT IS THE FIRST
EUROPEAN BANK TO SUFFER THE CONFISCATION
OUTSIDE CYPRUS. THE PRACTICE WILL
NEXT PICK UP MOMENTUM ACROSS THE
CONTINENT. A LEGAL BATTLE IS COMING FOR CERTAIN, TO ARGUE OVER WHETHER
THE BAIL-IN IS A DEBT DEFAULT EVENT
COVERED BY THE CREDIT DEFAULT SWAP
CONTRACT. THE JACKASS GUESSES NO,
SINCE ONLY A COUPON RENEGE ON UNDATED
RARELY SEEN NOTES, AND NOT A FULL
BOND BUST WITH BANK FAILURE. $$$

The Dieselboom template has finally been used at a big European bank. Monte
Paschi halted coupon payments
on Tier 1 bondholders, effectively
bailing in $650 million in notes
to recapitalize the bank. It
is the oldest bank in Italy,
based in Siena.
It suspended interest payments
on three hybrid notes after European
authorities demanded bondholders
contribute to the restructuring
of the failed Italian bank. Under
the terms of the undated notes,
the lender is legally permitted
to suspend interest without a
default, and is not required
to compensate for the missed
coupons when payments resume.
While the maneuver seemed harsh,
it is proper for bank corporate
bondholders to be the first losers
in a bank failure event. The
bank officials warned that Tier
2 bondholders are also soon likely
to lose on coupon payments.

At risk also is about EUR 2.6 billion of more senior Upper Tier 2 debt in three
issues, done in the form of Euros
and British Pounds. Payments are
not expected to continue. The next
big question is whether the important
ruling body on bank derivatives
(ISDA) will decide that a bondholder
bail-in qualifies as a default.
Such a ruling would result in the
payout of Credit Default Swap contracts.
The Jackass guesses no on CDSwap
payouts, since the big banks would
be required to part ways with their
precious funds. No bank failure
was announced, and the unusual
notes are undated. The CDSwap
contract to insure against losses
on subordinated Monte Paschi debt
covers a total of EUR 10 million
of their junior bonds for five
years. The cost is EUR 2.1
million in advance and EUR 500,000
annually, according to CMA. It
signals a 49.5% probability of
default within the timespan. The
swap contracts stipulate that the
insurance holder be paid face value
in exchange for handing over the
underlying securities, or the cash
equivalent, in the event that a
borrower fails to conform to its
debt agreements. It will be interesting
to watch Monte Paschi. See the
Bloomberg article (CLICK HERE).